Risk Taking and Information Aggregation in Groups

Spiros Bougheas, Jeroen Nieboerr () and Martin Sefton
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Jeroen Nieboerr: Department of Social Policy, London School of Economics and Political Science

No 2014-09, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We report an experiment examining risk taking and information aggregation in groups. Group members come to the table with an individual preference for a choice under risk, based on privately received information, and can share this information with fellow group members. They then make a decision under risk on behalf of the group using a random dictatorship mechanism, as well as an individual decision. Our analysis reveals that, while the behavior of many subjects is consistent with Bayesian rationality, a considerable number of subjects exhibited ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also observe a striking degree of consensus: in most groups all members made the same choice on behalf of the group. The pattern of individual choices after group deliberation suggests that the high degree of group consensus is due to persuasive arguments of other group members.

Keywords: Group behavior; Teams; Decision Making; Risk; Experiment (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-cta and nep-exp
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Related works:
Journal Article: Risk taking and information aggregation in groups (2015)
Working Paper: Risk taking and information aggregation in groups (2015)
Working Paper: Risk Taking and Information Aggregation in Groups (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcdx:2014-09

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