This paper examines the effect of peers on individual risk taking. In the absence of informational motives, we investigate why social utility concerns may drive peer effects. We test for two main channels: utility from payoff differences and from conforming to the peer. We show experimentally...

A particular problem of traditional Rational Choice Theory is that it cannot explain equilibrium selection in simple coordination games. In this paper we analyze and discuss the solution concept for common coordination problems as incorporated in the theory of Team Reasoning (TR). Special...

I experimentally examine whether feedback about others' choices provides an anchor for decision-making under ambiguity. In a between-subjects design I vary whether subjects learn choices made individually by a "peer" in a first part when facing the same task a second time, and whether prospects...

Relational contracts have been shown to mitigate moral hazard in labor and credit markets. A central assumption in most theoretical and experimental studies is that, upon misbehaving, agents can be excluded from their current source of income and have to resort to less attractive outside...

We examine experimentally the effect of complexity on individual decision making. We focus on credit choices, as they have been widely criticized for their complexity in recent years. In a first study, we find that complexity in benefits leads to random mistakes, while complexity in costs leads...

Many initiatives worldwide aim at improving financial literacy through targeted education programs, yet there is little evidence regarding their effectiveness. We examine the impact of a short financial education program on teenagers in German high schools. Our findings reveal that the training...