Peer E↵ects in Risk Taking

This paper examines the e↵ect of peers on individual risk taking. In the absence of informational motives, we investigate why social utility concerns may drive peer e↵ects. We test for two main channels: utility from payo↵ di↵erences and from conforming to the peer. We show experimentally that social utility generates substantial peer e↵ects in risk taking. These are mainly explained by utility from payo ↵ di↵erences, in line with outcome-based social preferences. Contrary to standard assumptions, we show that estimated social preference parameters change significantly when peers make active choices, compared to when lotteries are randomly assigned to them