Observing others' behavior and risk taking in decisions from experience

Eldad Yechiam, Meir Druyan and Eyal Ert

Judgment and Decision Making, 2008, vol. 3, issue 7, pages 493-500

Abstract: This paper examines how observing other people's behavior affects risk taking in repeated decision tasks. In Study 1, 100 participants performed experience-based decision tasks either alone or in pairs, with the two members being exposed to each others' choices and outcomes. The tasks involved either equiprobable gains and losses or frequent small gains and rare large losses. The results indicated that, in both risk types, the social exposure increased the proportion of risky selection, but its effect was stronger in the rare-loss condition. In Study 2 the rare-loss task was administered to 32 study participants, with a target individual observing the choices of a paired individual. The results showed that observing others, rather than being observed, led to the pattern of increased risk taking. The findings of the two studies indicate the importance of distinguishing different types of risky situations and shed light on contradictory findings in the literature.

Keywords: risky shift; social learning; foregone payoff (search for similar items in EconPapers)
Date: 2008

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Persistent link: http://EconPapers.repec.org/RePEc:jdm:journl:v:3:y:2008:i:7:p:493-500

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