Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment

Noam Yuchtman, Florian Ederer, Bruno Ferman and Leonardo Bursztyn

No 222, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: Using a high-stakes field experiment conducted with a financial brokerage, we implement a novel design to separately identify two channels of social influence in financial decisions, both widely studied theoretically. When someone purchases an asset, his peers may also want to purchase it, both because they learn from his choice ("social learning") and because his possession of the asset directly affects others' utility of owning the same asset ("social utility"). We find that both channels have statistically and economically significant effects on investment decisions. These results can help shed light on the mechanisms underlying herding behavior in financial markets.

Date: 2013
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Citations: View citations in EconPapers (11)

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Working Paper: Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed013:222

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