I Did it Your Way. An Experimental Investigation of Peer Effects in Investment Choices

We experimentally investigate imitation in investment choices and focus on cognitive aspects of decision making. At this aim, we manipulate three main dimensions of choice: time pressure, normative content of social information, and uncertainty of the investment. We document the existence of imitation, with stronger social effects among those who discover to be less cautious than their peers. In line with our hypotheses, a piece of information which is more representative of average group behavior induces stronger imitation. Furthermore, higher time pressure fosters imitation. In contrast to our hypotheses, imitation is weaker for uncertain investments than for risky investments.