TY  - UNPD
A1  - Baghestanian, Sascha
A1  - Gortner, Paul J.
A1  - Weele, Joe͏̈l J. van der
T1  - Peer effects and risk sharing in experimental asset markets
T2  - SAFE working paper series ; No. 67
N2  - Previous research has documented strong peer effects in risk taking, but little is known about how such social influences affect market outcomes. The consequences of social interactions are hard to isolate in financial data, and theoretically it is not clear whether peer effects should increase or decrease risk sharing. We design an experimental asset market with multiple risky assets and study how exogenous variation in real-time information about the portfolios of peer group members affects aggregate and individual risk taking. We find that peer information ameliorates under-diversification that occurs in a market without such information. One reason is that peer information increases risk aversion and induces a concern for relative income position that may reduce or amplify risk taking, depending on whether the context highlights the most or least successful trader. Thus, contrary to conventional wisdom, we show that social interactions may help to reduce earnings volatility in financial markets, and we discuss implications for institutional design.
T3  - SAFE working paper - 67 
KW  - peer effects
KW  - laboratory experiments
KW  - asset markets
Y1  - 2014
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/34850
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-348504
UR  - http://safe-frankfurt.de/de/forschung/publikationen/working-paper-series.html
UR  - http://ssrn.com/abstract=2504541
IS  - September 30, 2014
PB  - SAFE
CY  - Frankfurt am Main
ER  -