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Higher-order risk preferences in social settings

Heinrich, T.; Mayrhofer, T.

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Authors

T. Heinrich

T. Mayrhofer



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.

Citation

Heinrich, T., & Mayrhofer, T. (2018). Higher-order risk preferences in social settings. Experimental Economics, 21(2), 434-456. https://doi.org/10.1007/s10683-017-9541-4

Journal Article Type Article
Acceptance Date Aug 20, 2017
Online Publication Date Sep 8, 2017
Publication Date Jun 1, 2018
Deposit Date Aug 22, 2017
Publicly Available Date Mar 29, 2024
Journal Experimental Economics
Print ISSN 1386-4157
Electronic ISSN 1573-6938
Publisher Springer
Peer Reviewed Peer Reviewed
Volume 21
Issue 2
Pages 434-456
DOI https://doi.org/10.1007/s10683-017-9541-4
Public URL https://durham-repository.worktribe.com/output/1378617

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Publisher Licence URL
http://creativecommons.org/licenses/by/4.0/

Copyright Statement
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.






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