Journal Article

Preferences over social risk

Glenn W. Harrison, Morten I. Lau, E. Elisabet Rutström and Marcela Tarazona-Gómez

in Oxford Economic Papers

Volume 65, issue 1, pages 25-46
Published in print January 2013 | ISSN: 0030-7653
Published online April 2012 | e-ISSN: 1464-3812 | DOI: https://dx.doi.org/10.1093/oep/gps021
Preferences over social risk

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  • Design of Experiments
  • Microeconomics

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We elicit individual preferences over social risk. We identify the extent to which these preferences are correlated with preferences over individual risk and the well-being of others. We examine these preferences in the context of laboratory experiments over small, anonymous groups, although the methodological issues extend to larger groups that form endogenously (e.g., families, committees, communities). Preferences over social risk can be closely approximated by individual risk attitudes when subjects have no information about the risk preferences of other group members. We find no evidence that subjects systematically reveal different risk attitudes in a social setting with no prior knowledge about the risk preferences of others compared to when they solely bear the consequences of the decision. However, we also find that subjects are significantly more risk averse when they know the risk preferences of other group members.

Keywords: C91; C92; D01

Journal Article.  8220 words.  Illustrated.

Subjects: Design of Experiments ; Microeconomics

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