The impact of (social) anchors on Prospect Theory’s value function

Anchoring impacts risk-taking decisions. This paper provides experimental evidence (n = 744) that (social) anchors shift the Prospect Theory’s value function (Kahneman and Tversky, 1979; Tversky and Kahneman, 1992). We observe that extreme (social) anchors lead to shifts in the value function, indicating a change in risk-taking. Anchors that are in line with risk-averse (risk-seeking) behavior lead, relative to the baseline, to more risk-averse (risk-seeking) decisions. Our findings are similar for social and non-social environments. • We study the impact of (social) anchors on Prospect Theory’s value function. • Anchors lead to adjusted risk-taking. • Anchors in line with risk-averse (risk-seeking) behavior lead to more risk-averse (risk-seeking) decisions. • We find similar effects for social and for non-social anchors.