ASFEE 6 in Paris

Authors > Schmidt Ulrich

Tuesday 16
Peer Effects

› 9:25 - 9:50 (25min)
› 253
Social Reference Points and Risk Taking
Andreas Friedl  1@  , Michael Eichenseer, Ulrich Schmidt@
1 : Kiel Institute for the World Economy  (IfW)  -  Website
Hindenburgufer 66 D-24105 Kiel -  Germany

For long, risky decisions where perceived as decisions in isolation. But, even if the decision not directly affects someone else, the presence of someone else can have an effect on the decision by social comparison. The literature on risk and social comparison shows that especially men react to social comparison by increasing their risk choices compared to decisions in isolation. Men are perceived as prone to compete what could explain the increased risk taking often observed. We use an experimental study where subjects take individual risks and compare their outcomes with a peer. We specifically can control for believes about the other peer's outcome and gender. By changing the correlation structure between outcomes in our treatments we can vary the potential outcome difference between the two peers (Positive correlated: both win or both lose vs negative correlated: one wins the other loses). Women don't react to a social comparison situation by changing their risk attitudes, neither in the positive correlated or in the negative correlation treatment, either when matched with a man or a woman. Contrary, men do react to the partner's gender. Surprisingly, similar to women, men do not change their risk taking when matched with a male peer. Surprisingly, when matched with a woman, they adapt their risk taking to minimize the possible outcome differences between them and their peer. Depending on the treatment, in positive correlated this means they increase their risk choices, in negative correlated they decrease their risk choices, compared to their choice in isolation. We conclude that social comparison does play a role in risky decisions and that special emphasis should be given to the gender of the peer, decision takers compare themselves with.

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