Keywords

peer effects, risk aversion, trust

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 is only 41% as large as the difference was before starting the MBA. Finding no peer effects in trust is consistent with recent research showing that distinct cognitive processes govern risk aversion and trust.

Original Publication Citation

Peer Effects in Risk Aversion and Trust, 2014, with Kenneth R. Ahern and Ran Duchin, Review of Financial Studies

Document Type

Peer-Reviewed Article

Publication Date

2014

Publisher

Review of Financial Studies

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

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