Social Comparison and Risk Taking Behavior

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper studies the effects of social comparison on risk taking behavior. In our framework, decision makers evaluate the consequences of their choices as changes with respect to both their own and their peers' conditions. We test experimentally whether different positions in the social ranking determine different risk attitudes. Subjects interact in a simulated workplace environment, where they receive possibly different wages as compensation for effort and then undertake a risky decision that may give them an extra gain. We find that social comparison matters for risk attitudes. In addition, risk aversion decreases with the size of social gains. As a consequence, subjects are less risk averse in social loss than in small social gain, whereas their risk attitudes do not differ between social loss and large social gain. Terms of use: Documents in

Keeping Up with the E-Joneses: Do Online Social Networks Raise Social Comparisons?

“…The action of comparing oneself with others in a reference group in order to evaluate or to enhance some aspects of the self is known as "social comparison". Such behaviour affects a variety of economic choices including consumption, investments in human capital, effort in the workplace, risk taking, and contribution to the provision of public goods just to name a few (Linde and Sonnemans, 2012;Cohn et al, 2014;Gamba et al, 2014). In addition, social comparisons are a fundamental determinant of life satisfaction (Clark and Oswald, 1996;Ferrer-i Carbonell, 2005;D'Ambrosio and Frick, 2007).…”

Competition and subsequent risk-taking behaviour: Heterogeneity across gender and outcomes

“…Competition induces ex post inequality, thereby making relative earnings salient in models such as Fehr and Schmidt (1999) and Charness and Rabin (2002). Earning different amounts may affect decisions under risk via social comparison as shown by Fafchamps et al (2015); Gamba et al (2014); Linde and Sonnemans (2012), and Schmidt et al (2015). However, inequality of earnings characterizes many payment schemes and is not a distinguishing feature of competition.…”

Prospect Theory, Fairness, and the Escalation of Conflict at a Negotiation Impasse*

“…An experimental body of literature on the interaction of risk and social preferences is only emerging and there is no shared understanding of how to best model such effects (Trautmann and Vieider, 2012). Evidence from Brennan et al (2008), Bault et al (2008), Haisley et al (2008), Bolton and Ockenfels (2010), Linde and Sonnemans (2012), Rohde and Rohde (2011), López-Vargas (2014), Andersson et al (2014), and Gamba et al (2017) suggests that redistributive decision-making under risk depends heavily on the context and auxiliary design attributes (Loewenstein et al, 1989;Guala, 2005;List, 2007;Bardsley, 2008).…”