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Peer Effects and Risk-Taking Among Entrepreneurs: Lab-in-the-Field Evidence

Steeve Marchand and Maria Adelaida Lopera

Cahiers de recherche from Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques

Abstract: We study how social interactions influence entrepreneurs' attitudes toward risk. We conduct two risk-taking experiments within workshops organized for young Ugandan entrepreneurs. Between the two experiments, the entrepreneurs participate in a networking activity where they build relationships and discuss with each other. We collect detailed data on peer network formation and on participants' choices before and after the networking activity. Our design implicitly controls for homophily effects (i.e. the tendency of individuals to develop relationships with people who have similar characteristics). We find that risk aversion is affected by social conformity. Participants tend to become more (less) risk averse in the second experiment if the peers they discuss with are on average more (less) risk averse in the first experiment. This suggests that social interactions play a role in shaping risk preferences.

Keywords: preference; risk aversion; entrepreneur; social norms (search for similar items in EconPapers)
JEL-codes: D03 D81 M13 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-ent, nep-exp, nep-net, nep-soc, nep-upt and nep-ure
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:crrecr:1703

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