Social comparison and risky choices

Jona Linde, Joep Sonnemans

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Theories (and experiments) on decision making under risk typically ignore (and exclude) a social context. We explore whether this omission is detrimental. To do so we experimentally investigate the simplest possible situation with both social comparison and risk: participants choose between two lotteries while a referent faces a fixed payoff. Participants are more risk averse when they can earn at most as much as their referent (loss situation) than when they are ensured they will earn at least as much as their referent (gain situation). Prospect theory with a social reference point would predict the exact opposite behavior. These results show that straightforward extensions of existing theories to allow for social comparison do not provide accurate predictions.
Original languageEnglish
Pages (from-to)45-72
Number of pages28
JournalJournal of Risk and Uncertainty
Volume44
Issue number1
DOIs
Publication statusPublished - 2012
Externally publishedYes

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