Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment / Leonardo Bursztyn, Florian Ederer, Bruno Ferman, Noam Yuchtman.

Format:

Book

Author/Creator:

Bursztyn, Leonardo.

Contributor:

National Bureau of Economic Research.

Ederer, Florian.

Ferman, Bruno.

Yuchtman, Noam.

Series:

Working Paper Series (National Bureau of Economic Research) no. w18241.

NBER working paper series no. w18241

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

Using a high-stakes field experiment conducted with a financial brokerage, we implement a novel design to separately identify two channels of social influence in financial decisions, both widely studied theoretically. When someone purchases an asset, his peers may also want to purchase it, both because they learn from his choice ("social learning") and because his possession of the asset directly affects others' utility of owning the same asset ("social utility"). We find that both channels have statistically and economically significant effects on investment decisions. These results can help shed light on the mechanisms underlying herding behavior in financial markets.

Notes:

Print version record

July 2012.