Many experiments have demonstrated that when evaluating payoffs, people take not only their own payoffs into account, but also the payoffs of others in their social environment. Most of this evidence is found in settings where payoffs are riskless. It is plausible that if people care about the payoffs of others, they do so not only in a riskless context, but also in a risky one. This suggests that an individual's decision making under risk depends on the risks others in his or her environment face. This paper is the first to test whether individuals' risk attitudes are affected by the risks others face. The results show that risk attitudes appear to be less affected by others' risks than expected, even though the same subjects do show concerns for inequality in a riskless setting. Interestingly, we find that people prefer risks to be independent across individuals in society rather than correlated.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Existing experimental research on behavior in weakest-link games shows overwhelmingly the inability of people to coordinate on the efficient equilibrium, especially in larger groups. We hypothesize that people will be able to coordinate on efficient outcomes, provided they have sufficient freedom to choose their interaction neighborhood. We conduct experiments with medium sized and large groups and show that neighborhood choice indeed leads to coordination on the fully efficient equilibrium, irrespective of group size. This leads to substantial welfare effects. Achieved welfare is between 40 and 60 percent higher in games with neighborhood choice than without neighborhood choice. We identify exclusion as the simple but very effective mechanism underlying this result. In early rounds, high performers exclude low performers who in consequence 'learn' to become high performers. Terms of use: Documents inJEL-Code: C720, C920, D020, D030, D850.

As societies are increasingly concerned with risks, it is important to evaluate risks not only from an individual but also from a societal perspective. Two essential dimensions of public or social risks are the inequality concerning the distribution of risks over various groups and members of society and the level of risk faced by individuals and by the society as a whole. This paper disentangles these two essential dimensions and studies people's preferences concerning different types of allocations of risks over groups of people. We do so in a laboratory experiment with real incentives, where subjects are placed in the role of a social planner and choose between different types of allocations of risks over 10 other participants. The allocations differ only in terms of dispersion, i.e. they differ only in terms of inequality and risk. The majority of our subjects exhibit clear preferences over different types of allocations consistent with ex ante inequality and individual risk aversion, and ex post inequality and collective risk seeking behavior. These results are consistent with the literature on public risk and can be reconciled with responsibility aversion.

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