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Higher-order risk preferences in social settings.

Heinrich, T. and Mayrhofer, T. (2018) 'Higher-order risk preferences in social settings.', Experimental economics., 21 (2). pp. 434-456.

Abstract

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.

Item Type:Article
Full text:(AM) Accepted Manuscript
First Live Deposit - 24 August 2017
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Full text:(VoR) Version of Record
Available under License - Creative Commons Attribution.
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Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1007/s10683-017-9541-4
Publisher statement:Open Access. This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
Record Created:24 Aug 2017 09:43
Last Modified:24 Apr 2018 09:38

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