We explore how risk preferences affect pro-social behavior under uncertainty. We analyze a modified dictator game in which the dictator can, by reducing her own sure payoff, increase the odds that an unknown recipient wins a lottery. We first augment a standard social preferences model with reference-dependent risk attitudes and then test the model’s predictions for the dictator’s giving behavior using a laboratory experiment. Consistent with the predictions of the model, we find that the relationship between giving behavior and a (...) giver’s loss aversion is mediated by the strength of the giver’s pro-social preferences. Among more pro-social dictators, an increase in loss aversion increases the likelihood that a dictator contributes to a recipient. (shrink)

We report the results of an experiment on how individual risk taking clusters together when subjects are informed of peers’ previous risk taking decisions. Subjects are asked how much of their endowment they wish to allocate in a lottery in which there is a 50% chance the amount they invest will be tripled and a 50% chance their investment will be lost. We use a 2 × 2 factorial design varying: (i) whether the subjects initially observed high or low investment (...) social anchors, (ii) whether information about the investment decisions of other subjects in their social group is provided. We find strong evidence that individuals' risk taking decisions are malleable to that of their peers, which in turn leads to social clustering of risk taking. Social anchors shape initial risk taking, with mean investment then converging to a high level across treatments. (shrink)

This paper aims to explore whether the usage of credit cards has peer effects in rural areas of China. The results suggest that the usage of credit cards will be affected by the behavior of other farmers; namely, the usage of credit cards has peer effects in rural areas. We also verify that women, older, and low-academic farmers show stronger peer effects. The results emphasize that, compared with the mass farmers and vulnerable farmers, the usage of elite farmers is more (...) likely to affect the same behaviors of other farmers. Our study contributes to prior literature by giving empirical insights into the consequences of peer effects on the credit card usage of farmers, which conduces to a better understanding of the financial decision-making of farmers. The research may provide a practical implication for the optimal design of policy interventions. On the one hand, banks and other financial institutions can promote innovative financial products in rural areas with the help of peer effects; on the other hand, regulators can regulate farmers’ wrong financial behaviors by the social multiplier of peer effects to reduce systemic risks in rural finance. (shrink)