Peer Effects and Risk-Taking Among Entrepreneurs: Lab-in-the-Field Evidence

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07 Mars 2017
Types de publication: 
Cahier de recherche
Auteur(s): 
Steeve Marchand
Maria Adelaida Lopera
Axe de recherche: 
Enjeux économiques et financiers
Mots-clés: 
Preference
Risk aversion
Entrepreneur
Social norms
Classification JEL: 
D03
D81
M13
Z13

We study how social interactions influence entrepreneurs' attitudes toward risk. We conduct two risk-taking experiments within workshops organized for young Ugandan entrepreneurs. Between the two experiments, the entrepreneurs participate in a networking activity where they build relationships and discuss with each other. We collect detailed data on peer network formation and on participants' choices before and after the networking activity. Our design implicitly controls for homophily effects (i.e. the tendency of individuals to develop relationships with people who have similar characteristics). We find that risk aversion is affected by social conformity. Participants tend to become more (less) risk averse in the second experiment if the peers they discuss with are on average more (less) risk averse in the first experiment. This suggests that social interactions play a role in shaping risk preferences.

Contact: 

Lopera : University of Munich (e-mail: malopera@econ.lmu.de)
Marchand : Université Laval (e-mail: steeve.marchand@ecn.ulaval.ca)