Review of Financial Studies Vol. 27 No. 11 2014

Peer Effects in Risk Aversion and Trust

Kenneth R. Ahern^1,2; Ran Duchin³; Tyler Shumway⁴

¹ University of Southern California · ² California Southern University · ³ University of Washington · ⁴ University of Michigan–Ann Arbor

Abstract

Existing evidence shows that risk aversion and trust are largely determined by environmental factors. We test whether one such factor is peer influence. Using random assignment of MBA students to peer groups and predetermined survey responses of economic attitudes, we find causal evidence of positive peer effects in risk aversion and no effects in trust. After the first year of the MBA program, the difference between an individual and her peers' average risk aversion has shrunk by 41%. Finding no peer effects in trust is consistent with recent research showing that distinct cognitive processes govern risk aversion and trust.

DOI

10.1093/rfs/hhu042

Volume

27

Issue

11

Pages

3213-3240

Language

en

Sources

openalex crossref bibtex:phds-export.bib

Cite

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