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Peer effects on risk behaviour: the importance of group identity

Francesca Gioia ()

Experimental Economics, 2017, vol. 20, issue 1, No 5, 100-129

Abstract: Abstract This paper investigates whether and to what extent group identity plays a role in peer effects on risk behaviour. We run a laboratory experiment in which different levels of group identity are induced through different matching protocols (random or based on individual painting preferences) and the possibility to interact with group members via an online chat in a group task. Risk behaviour is measured by using the Bomb Risk Elicitation Task and peer influence is introduced by giving subjects feedback regarding group members’ previous decisions. We find that subjects are affected by their peers when taking decisions and that group identity influences the magnitude of peer effects: painting preferences matching significantly reduces the heterogeneity in risk behaviour compared with random matching. On the other hand, introducing a group task has no significant effect on behaviour, possibly because interaction does not always contribute to enhancing group identity. Finally, relative riskiness within the group matters and individuals whose peers are riskier than they are take on average riskier decisions, even when controlling for regression to the mean.

Keywords: Peer effects; Group identity; Risk behaviour; Ranking (search for similar items in EconPapers)
JEL-codes: D03 D81 D83 Z13 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10683-016-9478-z

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