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Higher-order risk preferences in social settings
Citation Link: https://doi.org/10.15480/882.3398
Publikationstyp
Journal Article
Date Issued
2017-09-08
Sprache
English
Author(s)
TORE-DOI
TORE-URI
Journal
Volume
21
Issue
2
Start Page
434
End Page
456
Citation
Experimental Economics 21 (2): 434-456 (2018)
Publisher DOI
Scopus ID
Publisher
Springer Science + Business Media B.V.
We study prudence and temperance (next to risk aversion) in social settings. Previous experimental studies have shown that these higher-order risk preferences affect the choices of individuals deciding privately on lotteries that only affect their own payoff. Yet, many risky and financially relevant decisions are made in the social settings of households or organizations. We elicit higher-order risk preferences of individuals and systematically vary how an individual’s decision is made (alone or while communicating with a partner) and who is affected by the decision (only the individual or the partner as well). In doing so, we can isolate the effects of other-regarding concerns and communication on choices. Our results reveal that the majority of choices are risk averse, prudent, and temperate across social settings. We also observe that individuals are influenced significantly by the preferences of a partner when they are able to communicate and choices are payoff-relevant for both of them.
Subjects
Communication
Experiment
Prudence
Responsibility
Risk aversion
Temperance
DDC Class
330: Wirtschaft
More Funding Information
Financial support from the German Research Foundation (DFG) through FOR 655 and from the German Federal Ministry of Education and
Research (BMBF) through the IN-EAST School of Advanced Studies (Grant No. 01UC1304) is gratefully acknowledged.
Research (BMBF) through the IN-EAST School of Advanced Studies (Grant No. 01UC1304) is gratefully acknowledged.
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