Keep up with the winners: Experimental evidence on risk taking, asset integration, and peer effects

Fafchamps, Marcel, Kebede, Bereket and Zizzo, Daniel (2015) Keep up with the winners: Experimental evidence on risk taking, asset integration, and peer effects. European Economic Review, 79. pp. 59-79. ISSN 0014-2921

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Abstract

The paper reports the result of an experimental game on asset integration and risk taking. We find some evidence that winnings in earlier rounds affect risk taking in subsequent rounds, but no evidence that real life wealth outside the experiment affects risk taking. Controlling for past winnings, participants receiving a low endowment in a round engage in more risk taking. We test a ‘keeping-up-with-the-Joneses’ hypothesis and find that subjects seek to keep up with winners, though not necessarily with average earnings. Overall, the evidence suggests that risk taking tracks a reference point affected by social comparisons.

Item Type: Article
Uncontrolled Keywords: risk,asset integration,social comparisons,prospect theory
Faculty \ School: Faculty of Social Sciences > School of International Development
Depositing User: Pure Connector
Date Deposited: 06 Oct 2015 00:09
Last Modified: 06 Jul 2020 23:44
URI: https://ueaeprints.uea.ac.uk/id/eprint/54576
DOI: 10.1016/j.euroecorev.2015.07.001

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