Choice Shifts in Groups

Kfir Eliaz and Debraj Ray

No 205, Econometric Society 2004 North American Summer Meetings from Econometric Society

Abstract: The phenomenon of "choice shifts" in group decision-making is fairly ubiquitous in the social psychology literature. Faced with a choice between a ``safe" and ``risky" decision, group members appear to move to one extreme or the other, relative to the choices each member might have made on her own. Both risky and cautious shifts have been identified in different situations. This paper demonstrates that from an individual decision-making perspective, choice shifts may be viewed as a systematic violation of expected utility theory. We propose a model in which a well-known failure of expected utility - captured by the Allais paradox - is equivalent to a particular configuration of choice shifts. Thus, our results imply a connection between two well-known behavioral regularities, one in individual decision theory and another in the social psychology of groups

Keywords: Choice Shifts; Disappointment Aversion; Allais Paradox (search for similar items in EconPapers)
JEL-codes: D72 D81 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-evo and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ecm:nasm04:205

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