This paper studies the effect of social comparison on risk taking be-
havior. We assume that decision makers evaluate consequences of their
choices not only as variations with respect to their economic status but
also as variations with respect to the status of their peers. We test ex-
perimentally whether different positions in the social ranking determine
different risk attitudes. Decision makers interact in a workplace environ-
ment, where they receive possibly different wages as compensations for a
certain effort and then undertake a risky decision that may give them an
extra gain. We find that relative pay comparisons affect decision makers’
risk attitudes. In particular, both downward and upward pay comparisons
generate more risk loving behavior.
article pub. typess JER
Research article
article languages JER
Englisch
JEL-Classification for JER
C91 - Laboratory, Individual Behavior ; D0 - General; D81 - Criteria for Decision-Making under Risk and Uncertainty