Munich Personal RePEc Archive

Representation and Social Regret in Risk-Taking

İriş, Doruk (2017): Representation and Social Regret in Risk-Taking.

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Abstract

Representing others brings responsibility and fear of letting others down (social regret). We incorporate these phenomena in a theoretical model and provide a psychological perspective to explain the individual-group discontinuity in risk-taking activities. A representative makes a state-wise comparison of the consequences of her decision and an unchosen advice given by a group member. Social regret-aversion renders extreme utility differences salient and allows both risky and cautious shifts.

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