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Updated: Jul 25, 2025

Measuring the Subjective Value of Risky and Ambiguous Options using Experimental Economics and Functional MRI Methods
Published on: September 19, 2012
Socially interdependent risk taking
Alexandros Karakostas1, Giles Morgan2, Daniel John Zizzo2
1School of Management, ESSCA, Lyon, France.
Abstract:
We report the results of an experiment on how individual risk taking clusters together when subjects are informed of peers' previous risk taking decisions. Subjects are asked how much of their endowment they wish to allocate in a lottery in which there is a 50% chance the amount they invest will be tripled and a 50% chance their investment will be lost. We use a 2 × 2 factorial design varying: (i) whether the subjects initially observed high or low investment social anchors, (ii) whether information about the investment decisions of other subjects in their social group is provided. We find strong evidence that individuals' risk taking decisions are malleable to that of their peers, which in turn leads to social clustering of risk taking. Social anchors shape initial risk taking, with mean investment then converging to a high level across treatments.
Supplementary Information:
The online version contains supplementary material available at 10.1007/s11238-023-09927-x.
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