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Social interaction effects: The impact of distributional preferences on risky choices.

ABSTRACT: This paper identifies convex distributional preferences as a possible cause for the empirical observation that agents belonging to the same group tend to behave similarly in risky environments. We first show theoretically that convex distributional preferences imply social interaction effects in risky choices in the sense that observing a peer choose a risky (safe) option increases the agent's incentive to choose the risky (safe) option as well, even when lotteries are stochastically independent and the agent can only observe the lottery chosen by the peer but not the corresponding outcome. We then confirm our theoretical predictions experimentally.

SUBMITTER: Gantner A

PROVIDER: S-EPMC5978880 | biostudies-other | 2018

REPOSITORIES: biostudies-other

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Social interaction effects: The impact of distributional preferences on risky choices.

Gantner Anita A Kerschbamer Rudolf R

Journal of risk and uncertainty 20180508 2

This paper identifies convex distributional preferences as a possible cause for the empirical observation that agents belonging to the same group tend to behave similarly in risky environments. We first show theoretically that convex distributional preferences imply social interaction effects in risky choices in the sense that observing a peer choose a risky (safe) option increases the agent's incentive to choose the risky (safe) option as well, even when lotteries are stochastically independent ...[more]

PMID: 29937628

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