Comparing Small-Group and Individual Behavior in Lottery-Choice Experiments

Ronald Baker, Susan Laury and Arlington Williams

No 2007-018, CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: Lottery-choice experiments are conducted to compare risk preferences revealed by three-person groups versus isolated individuals. A lottery-choice experiment consists of a menu of paired lottery choices structured so that the crossover point from a low-risk to a high-risk lottery can be used to infer the degree of risk aversion. A between-subjects experiment of group versus individual lottery-choice decisions reveal that there is not a significant difference in the average crossover point, but lottery choices are affected by a significant interaction between subject composition (individual or group) and lottery winning percentage. Also, a three-phased individual-group-individual sequenced experiment reveals that the count of safe lotteries chosen by groups is, on average, significantly greater than the mean of the individual members. Finally, making a phase-two group decision has a significant impact on subsequent phase-three individual decisions relative to the initial phase-one (individual) decisions.

Keywords: lab experiments; risk preferences; group decisions (search for similar items in EconPapers)
JEL-codes: C91 C92 D80 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007-09, Revised 2008-05
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-dcm, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (71)

Downloads: (external link)
https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2007-018.pdf (application/pdf)

Related works:
Journal Article: Comparing Small‐Group and Individual Behavior in Lottery‐Choice Experiments (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inu:caeprp:2007018

Access Statistics for this paper

More papers in CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington Contact information at EDIRC.
Bibliographic data for series maintained by Center for Applied Economics and Policy Research ().