Adolescent risk taking is strongly influenced by peer presence. The aim of the present study was to investigate the effect of peer presence on the ERP after negative and positive feedback in the time range of the feedback‐related negativity (FRN). Eighteen male adolescents completed a version of the Balloon Analogue Risk Task (BART) under two conditions: playing alone and while observed by a peer. We recorded the ERPs after success or failure feedback and analyzed risk‐taking behavior under both conditions. Behavioral results show that the participants were more cautious when being watched by a peer, especially after success. ERPs show that participants under peer presence exhibit more negative FRN after failure feedback than in the single condition, but no greater positivities after success feedback in the observed condition compared to the single condition. Results are in line with reinforcement learning theory and psychological aspects of loss prevention. The results suggest that the effect of peer presence on risk‐taking behavior depends on the specific situational context.