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A System for Tracking the Dynamics of Social Preference Behavior in Small Rodents
Published on: November 21, 2019
Higher-order risk preferences in social settings
Timo Heinrich1, Thomas Mayrhofer2,3
11Durham University Business School, Mill Hill Lane, Durham, DH1 3LB UK.
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.
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