Social comparisons are associated with poorer and riskier financial decision making, no matter whether encounters are sporadic or repeated

Barrós-Loscertales, Alfonso, Espín, Antonio M. and Perales, José C. (2016) Social comparisons are associated with poorer and riskier financial decision making, no matter whether encounters are sporadic or repeated. The Spanish Journal of Psychology, 19 , E57. E57. ISSN 1138-7416 [Article] (Published online first) (doi:10.1017/sjp.2016.55)

PDF - Final accepted version (with author's formatting)
Download (699kB) | Preview


Previous research suggests that social comparisons affect decision making under uncertainty. However, the role of the length of the social interaction for this relationship remains unknown. This experiment tests the effect of social comparisons on financial risk taking and how this effect is modulated by whether social encounters are sporadic or repeated. Participants carried out a computer task consisting of a series of binary choices between lotteries of varying profitability and risk, with real monetary stakes. After each decision, participants could compare their own payoff to that of a counterpart who made the same decision at the same time and whose choices/earnings did not affect the participants’ earnings. The design comprised three between-subjects treatments which differed in the nature of the social interaction: participants were informed that they would be matched with either (a) a different participant in each trial, (b) the same participant across all trials, or (c) a "virtual participant", i.e. a computer algorithm. Compared to the non-social condition (c), subjects in both social conditions (a and b) chose lotteries with lower expected value (z=-3.10, p<0.01) and higher outcome variance (z=2.13, p=0.03). However, no differences were found between the two social conditions (z=1.15, p=0.25 and z=0.35, p=0.73, respectively). These results indicate that social comparison information per se leads to poorer and riskier financial decisions, irrespective of whether or not the referent other is encountered repeatedly.

Item Type: Article
Research Areas: A. > Business School > Economics
Item ID: 18807
Notes on copyright: This article has been published in a revised form in The Spanish Journal of Psychology This version is free to view and download for private research and study only. Not for re-distribution, re-sale or use in derivative works. COPYRIGHT: © Universidad Complutense de Madrid and Colegio Oficial de Psicólogos de Madrid 2016
Useful Links:
Depositing User: Antonio Espin Martin
Date Deposited: 03 Feb 2016 10:50
Last Modified: 29 Oct 2019 16:31

Actions (login required)

View Item View Item

Full text downloads (NB count will be zero if no full text documents are attached to the record)

Downloads per month over the past year