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Defaults, Normative Anchors and the Occurrence of Risky and Cautious Shifts

Stephan Jagau () and Theo (T.J.S.) Offerman ()
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Theo (T.J.S.) Offerman: University of Amsterdam; Tinbergen Institute, The Netherlands

No 17-083/I, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Choice shifts occur when individuals advocate a risky (safe) decision when acting as part of a group even though they prefer a safe (risky) decision when acting as individuals. Even though research in psychology and economics has produced a mass of evidence on this puzzling phenomenon, there is no agreement about which mechanism produces choice shifts. In an experiment, we investigate the performance of two prominent mechanisms that have been proposed to explain the phenomenon; (i) rank-dependent utility and (ii) a desire to conform to the wishes of the majority. The evidence provides clear support for the conformity explanation.

Keywords: risky shift; cautious shift; conformity; diffusion of responsibility; rank-dependent utility (search for similar items in EconPapers)
JEL-codes: D03 D71 D81 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ore and nep-upt
Date: 2017-09-06
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Journal Article: Defaults, normative anchors, and the occurrence of risky and cautious shifts (2018) Downloads
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