Keep up with the winners: Experimental evidence on risk taking, asset integration, and peer effects

Marcel Fafchamps, Bereket Kebede and Daniel Zizzo

European Economic Review, 2015, vol. 79, issue C, 59-79

Abstract: The paper reports the result of an experimental game on asset integration and risk taking. We find some 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. Controlling for past winnings, participants receiving a low endowment in a round engage in more risk taking. We test a ‘keeping-up-with-the-Joneses’ hypothesis and find that subjects seek to keep up with winners, though not necessarily with average earnings. Overall, the evidence suggests that risk taking tracks a reference point affected by social comparisons.

Keywords: Risk; Asset integration; Social comparisons; Prospect theory (search for similar items in EconPapers)
JEL-codes: C91 D12 D81 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Working Paper: Keep Up With the Winners: Experimental Evidence on Risk Taking, Asset Integration, and Peer Effects (2014)
Working Paper: Keep Up With the Winners: Experimental Evidence on Risk Taking, Asset Integration, and Peer Effects (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:79:y:2015:i:c:p:59-79

DOI: 10.1016/j.euroecorev.2015.07.001

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