Review of Financial Studies, 2014, vol. 27(11): 3213-3240.
69 Pages Posted: 16 Jun 2012 Last revised: 30 Mar 2016
Date Written: May 7, 2014
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.
Keywords: Peer effects, risk aversion, trust
JEL Classification: D81, D83, D01
Suggested Citation: Suggested Citation
Ahern, Kenneth R. and Duchin, Ran and Shumway, Tyler, Peer Effects in Risk Aversion and Trust (May 7, 2014). Review of Financial Studies, 2014, vol. 27(11): 3213-3240.. Available at SSRN: https://ssrn.com/abstract=2085009 or http://dx.doi.org/10.2139/ssrn.2085009