Increased social distance makes people more risk-neutral

ABSTRACT

Individuals are consistently observed to be risk-averse over gains and risk-seeking over losses. This study examined whether increased social distance would change these behavioral patterns. To test our hypothesis, social distance was manipulated by asking the participants to make decisions either for themselves or for another person (Experiment 1), either for a known person or for an unknown person (Experiment 2), and either for a close friend or for a distant friend (Experiment 3). The results of Experiments 1 and 3 showed that increased social distance made people more risk-neutral, and such an effect was stronger in the gain domain than in the loss domain. However, the effect of social distance was not observed in Experiment 2. These findings suggest that risk preferences are influenced by the social distance between decision makers and beneficiaries.

KEYWORDS:

• Gain/loss domain
• risk preference
• social distance

Funding

This research was financially funded by programs of the National Natural Science Foundation of China (31271112 and 71501073).

Notes

^1. Social distance, an important concept in social psychology, has become a hot topic since the 1920s (Bogardus, 1925). See Trope and Liberman (2010) for a review of this concept.

^2. RMB is the Chinese currency. The exchange rate was 1 RMB = US$0.15 at the time of the experiment.

Additional information

Funding

This research was financially funded by programs of the National Natural Science Foundation of China (31271112 and 71501073).

Notes on contributors

Qingzhou Sun

Qingzhou Sun is a PhD student of the School of Psychology and Cognitive Science at East China Normal University, China. His research interest lies in how social distance affects decision making. Yongfang Liu is a Professor in the School of Psychology and Cognitive Science at East China Normal University. His research interests are in the areas of judgment and decision making, especially self-other differences in decision making. Huanren Zhang is a Post-Doctoral Associate in the Social Science Division at New York University – Abu Dhabi. Jingyi Lu is an Assistant Professor in the School of Psychology and Cognitive Science at East China Normal University. Her research interests are in the areas of judgment and decision making, especially how social contexts influence decision making.

Yongfang Liu

Qingzhou Sun is a PhD student of the School of Psychology and Cognitive Science at East China Normal University, China. His research interest lies in how social distance affects decision making. Yongfang Liu is a Professor in the School of Psychology and Cognitive Science at East China Normal University. His research interests are in the areas of judgment and decision making, especially self-other differences in decision making. Huanren Zhang is a Post-Doctoral Associate in the Social Science Division at New York University – Abu Dhabi. Jingyi Lu is an Assistant Professor in the School of Psychology and Cognitive Science at East China Normal University. Her research interests are in the areas of judgment and decision making, especially how social contexts influence decision making.

Huanren Zhang

Qingzhou Sun is a PhD student of the School of Psychology and Cognitive Science at East China Normal University, China. His research interest lies in how social distance affects decision making. Yongfang Liu is a Professor in the School of Psychology and Cognitive Science at East China Normal University. His research interests are in the areas of judgment and decision making, especially self-other differences in decision making. Huanren Zhang is a Post-Doctoral Associate in the Social Science Division at New York University – Abu Dhabi. Jingyi Lu is an Assistant Professor in the School of Psychology and Cognitive Science at East China Normal University. Her research interests are in the areas of judgment and decision making, especially how social contexts influence decision making.

Jingyi Lu

Qingzhou Sun is a PhD student of the School of Psychology and Cognitive Science at East China Normal University, China. His research interest lies in how social distance affects decision making. Yongfang Liu is a Professor in the School of Psychology and Cognitive Science at East China Normal University. His research interests are in the areas of judgment and decision making, especially self-other differences in decision making. Huanren Zhang is a Post-Doctoral Associate in the Social Science Division at New York University – Abu Dhabi. Jingyi Lu is an Assistant Professor in the School of Psychology and Cognitive Science at East China Normal University. Her research interests are in the areas of judgment and decision making, especially how social contexts influence decision making.