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On the consensus effect

David Dillenberger and Collin Raymond

Journal of Economic Theory, 2019, vol. 183, issue C, 384-416

Abstract: Individuals often tend to conform to the choices of others in group decisions, compared to choices made in isolation. We show that this behavior — which we term the consensus effect — is equivalent to a well-known violation of expected utility, namely strict quasi-convexity of preferences, which is shared by many popular non-expected utility models. In contrast to the equilibrium outcome when individuals are expected utility maximizers, quasi-convexity of preferences imply that group decisions may fail to properly aggregate preferences and strictly Pareto-dominated equilibria may arise.

Keywords: Aggregation of preferences; Choice shifts in groups; Consensus effect; Non-expected utility; Quasi-convex preferences (search for similar items in EconPapers)
JEL-codes: D71 D80 D81 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:jetheo:v:183:y:2019:i:c:p:384-416