For whom does social comparison induce risk-taking?
Oege Dijk ()
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Oege Dijk: Radboud University Nijmegen
Theory and Decision, 2017, vol. 82, issue 4, No 4, 519-541
Abstract:
Abstract A ‘bonus culture’ among financial traders has been blamed for the excessive risk-taking in the run-up to the latest financial crisis. I show that when individuals are more social gain seeking than social loss averse (i.e. gloating is stronger than envy), social comparison predicts more risk-taking as well as a preference for negatively correlated gambles. Testing these two joint propositions in a laboratory experiment, I find that preference for positively or negatively correlated outcomes is highly correlated with risk-taking in a social risky investment task. While only a third of subjects prefer negatively correlated outcomes in a peer comparison setting, in line with relatively stronger social gain seeking, those subjects invest on average 50 % more in a risky gamble in their peer comparison setting than a reference group that made the same decision in an isolated individual setting. Subjects with a preference for positively correlated outcomes, in line with relatively stronger social loss aversion, do not show a higher propensity to invest in a risky gamble compared to the individual reference group.
Keywords: Social comparison; Risky choice; Experiments (search for similar items in EconPapers)
JEL-codes: C91 D01 D14 D81 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:theord:v:82:y:2017:i:4:d:10.1007_s11238-016-9578-4
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DOI: 10.1007/s11238-016-9578-4
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