Social interactions and (financial) decision-making

• Applicant: Professor Dr. Matthias Pelster
• Subject Area: Economic Theory ; Economic Policy, Applied Economics
• Term: from 2020 to 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 434732045

The proposed project studies the impact of social interactions on investors’ financial decision-making. As literature provides first convincing evidence that investors' decision-making is influenced by social interactions, this project aims to propose a generalized framework of decision-making in the context of social interactions. The project studies whether social interactions mitigate or exacerbate risk aversion. We propose a unified theory of investors' preferences in the context of social interactions. In particular, we study preferences for dependencies between payoffs for own prospect in relation to payoffs of peers' prospects. In addition, the project examines the proposed theory in the context of consumer decisions and political choice.

• DFG Programme: Research Grants
• International Connection: United Kingdom
• Co-Investigator: Professor Dr. David Loschelder
• Cooperation Partner: Professor Marcel Lukas