Keep Up With the Winners: Experimental Evidence on Risk Taking, Asset Integration, and Peer Effects

Marcel Fafchamps, Bereket Kebede and Daniel Zizzo

No 9714, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper reports the result of an experimental game on asset integration and risk taking. We find evidence that winnings in earlier rounds affect risk taking in subsequent rounds, but no evidence that real life wealth outside the experiment affects risk taking. We find some evidence of imitation of the risk taking behavior of others that is distinct from learning. Controlling for past winnings, participants who receive a low endowment in a round engage in more risk taking. We also test a `keeping-up-with-the-Joneses' hypothesis and find some evidence that subjects seek to keep up with winners. Taken together, the evidence is consistent with risk taking tracking a reference point that is affected by social comparisons.

Keywords: Asset integration; Prospect theory; Risk; Social comparisons (search for similar items in EconPapers)
JEL-codes: C91 D12 D81 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Keep up with the winners: Experimental evidence on risk taking, asset integration, and peer effects (2015)
Working Paper: Keep Up With the Winners: Experimental Evidence on Risk Taking, Asset Integration, and Peer Effects (2014)
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