Abstract
Individual investor’s risky asset share, as well as stock market participants’ choice of total- and systematic stock portfolio risk, are found to be affected by financial risk-taking among peers. Furthermore, the results indicate that the influence of peers is stronger for less wealthy, for those with relatively higher disposable incomes, and for male investors, respectively. The results, obtained using an instrumental variable approach based on analysis of detailed individual level data, are robust towards a number of competing explanations and stress that interaction with peers’ is an important channel through which individuals’ overall financial risk-taking is affected.
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