Risk-taking and others: Does the social reference point matter?

Real-life risk decisions are taken in a social context. However, we still know little about how that affects risk decisions. We have experimentally investigated the effect of social comparison on risk taking. We designed an experiment that allows us to isolate social comparison from other channels whereby the social context can affect risk decisions. The design also allows us to find impacts of the social reference point both if the individual cares about the distance to the social reference point and if she cares about her rank. Thus, we compare risk-taking in isolation to risk-taking with various exogenously imposed social reference points. We find that risk-taking is affected by the desire to get ahead of others, both when the social reference point is within reach (rank can be affected) and when it is out of reach (rank cannot be affected). Our results suggest that people do not only care about rank but also care about the distance to the social reference point.