Social influences on risk attitudes

Applications in economics

S.T. Trautmann, F.M. Vieider

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

Abstract

Economic research on risk attitudes has traditionally focused on individual decision-making issues, without any consideration for potential social influences on preferences. This has been changing rapidly over the last years, with economists often taking inspiration from earlier psychological research in their increasing consideration of social aspects in decision-making under risk. We provide a broadly conceived overview of the recent literature, defining four different categories of social influences on economic decisions under risk: (1) the observation of other agents’ outcomes; (2) the observation of the decision maker’s outcomes by other agents; (3) the direct effect of the decision maker’s choices on other agents’ outcomes; and (4) the direct dependency of the decision maker’s outcomes on other agents’ choices. While many promising insights have been gained over the last few years, several shortcomings and inconsistencies in our current understanding of social influences on decision-making under risk are pointed out. The overview concludes with a discussion of two real-world applications – agency in financial markets and climate change – that prominently show the importance of furthering our knowledge in this area. In order to achieve such increased knowledge, a much deeper integration of currently dispersed disciplinary knowledge in the social sciences seems crucial.
Original languageEnglish
Title of host publicationHandbook of Risk Theory
EditorsS. Roeser, R. Hillerbrand, P. Sandin, M. Peterson
Place of PublicationHeidelberg
PublisherSpringer Verlag
Pages575-600
Number of pages1187
ISBN (Print)9789400714335
Publication statusPublished - 2012

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Social influence
Risk attitude
Economics
Decision maker
Decision making under risk
Individual decision making
Financial markets
Psychological
Economic research
Direct effect
Social sciences
Inconsistency
Decision under risk
Economists
Climate change

Cite this

Trautmann, S. T., & Vieider, F. M. (2012). Social influences on risk attitudes: Applications in economics. In S. Roeser, R. Hillerbrand, P. Sandin, & M. Peterson (Eds.), Handbook of Risk Theory (pp. 575-600). Heidelberg: Springer Verlag.
Trautmann, S.T. ; Vieider, F.M. / Social influences on risk attitudes : Applications in economics. Handbook of Risk Theory. editor / S. Roeser ; R. Hillerbrand ; P. Sandin ; M. Peterson. Heidelberg : Springer Verlag, 2012. pp. 575-600
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Trautmann, ST & Vieider, FM 2012, Social influences on risk attitudes: Applications in economics. in S Roeser, R Hillerbrand, P Sandin & M Peterson (eds), Handbook of Risk Theory. Springer Verlag, Heidelberg, pp. 575-600.

Social influences on risk attitudes : Applications in economics. / Trautmann, S.T.; Vieider, F.M.

Handbook of Risk Theory. ed. / S. Roeser; R. Hillerbrand; P. Sandin; M. Peterson. Heidelberg : Springer Verlag, 2012. p. 575-600.

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review

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AB - Economic research on risk attitudes has traditionally focused on individual decision-making issues, without any consideration for potential social influences on preferences. This has been changing rapidly over the last years, with economists often taking inspiration from earlier psychological research in their increasing consideration of social aspects in decision-making under risk. We provide a broadly conceived overview of the recent literature, defining four different categories of social influences on economic decisions under risk: (1) the observation of other agents’ outcomes; (2) the observation of the decision maker’s outcomes by other agents; (3) the direct effect of the decision maker’s choices on other agents’ outcomes; and (4) the direct dependency of the decision maker’s outcomes on other agents’ choices. While many promising insights have been gained over the last few years, several shortcomings and inconsistencies in our current understanding of social influences on decision-making under risk are pointed out. The overview concludes with a discussion of two real-world applications – agency in financial markets and climate change – that prominently show the importance of furthering our knowledge in this area. In order to achieve such increased knowledge, a much deeper integration of currently dispersed disciplinary knowledge in the social sciences seems crucial.

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Trautmann ST, Vieider FM. Social influences on risk attitudes: Applications in economics. In Roeser S, Hillerbrand R, Sandin P, Peterson M, editors, Handbook of Risk Theory. Heidelberg: Springer Verlag. 2012. p. 575-600