Decision process, preferences over risk and consensus rule: a group experiment

Andrea Morone, Simone Nuzzo and Tiziana Temerario

MPRA Paper from University Library of Munich, Germany

Abstract: The recent literature on individual vs. group decisions over risk has brought about divergent results, mainly depending on the institutional rules through which groups take decisions. While some studies where group decisions relied on the majority rule showed no appreciable difference between individuals and groups’ preferences, others where unanimity among group members was required found collective decisions to be less risk averse than individual ones. Of course, these studies share the imposition of a choice rule to determine the groups’ outcome. Alternatively, in the study at hand, we elicited groups’ preferences over risk using a consensus rule, i.e. leaving groups free to endogenously solve the potential disagreement among their members, just as in many real life instances. Our results from a logit regression unambiguously show that individuals’ preferences are systematically further from the risk neutrality than those of groups. In particular, individuals are more risk seeker than groups when facing gambles with positive expected payoff difference and more risk averse in the opposite case.

Keywords: Risk attitudes; group’s behaviour (search for similar items in EconPapers)
JEL-codes: C91 C92 D01 (search for similar items in EconPapers)
Date: 2017-05-23
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-dcm, nep-exp, nep-gth and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:79332

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