Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146895
Authors: 
Müller, Stephan
Rau, Holger A.
Year of Publication: 
2016
Series/Report no.: 
Discussion Papers, Center for European, Governance and Economic Development Research 290
Abstract: 
This paper theoretically and experimentally studies decision-making in risky and social environments. We explore the interdependence of individual risk attitudes and social preferences in form of inequality aversion as two decisive behavioral determinants in such contexts. Our model and the data demonstrate that individual risk aversion is attenuated when lagging behind peers, whereas it is amplified under favorable income inequality. People's choices are not only context-dependent, but are sensitive to their degree of inequality aversion. The findings contribute to the understanding of decision-making in environments like trading at stock markets, the saving patterns of households or charitable giving under uncertainty.
Subjects: 
Choice under Uncertainty
Social Comparison
Inequality Aversion
Risk Preferences
JEL: 
C91
D03
D63
D81
Document Type: 
Working Paper

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