NDLI: Are individuals more risk and ambiguity averse in a group environment or alone? Results from an experimental study

Content Provider	Springer Nature Link
Author	Brunette, Marielle Cabantous, Laure Couture, Stéphane
Copyright Year	2014
Abstract	Most decision-making research in economics focuses on individual decisions. Yet, we know, from psychological research in particular, that individual preferences can be sensitive to social pressures. In this paper, we study the impact of a group environment on individual preferences for risky (i.e., known probabilities) and ambiguous (i.e., unknown probabilities) prospects. In our experiment, each participant was invited to make a series of lottery-choice decisions in two different conditions. In the Alone condition, individuals made private choices, whereas in the Group condition, individuals belonged to a three-person group and group members’ choices were aggregated according to either a majority or unanimity rule. This design allows us to study the impact of a group environment on individuals’ attitude towards both risky and ambiguous prospects, while controlling for the decision rule used in the group. Our experimental results show that when individuals are in the Group condition, they tend to be less risk averse and more ambiguity averse than when they are not part of a group (Alone condition). Our experiment also suggests that the decision rule matters as it shows that these two trends tend to be stronger when the group implements a unanimity rule. Specifically, we found that individuals who belong to a group implementing a unanimity rule are significantly less risk averse than individuals who belong to a group that relies on the majority rule. We obtained a similar—but non-significant—result under ambiguity.
Starting Page	357
Ending Page	376
Page Count	20
File Format	PDF
ISSN	00405833
Journal	Theory and Decision
Volume Number	78
Issue Number	3
e-ISSN	15737187
Language	English
Publisher	Springer US
Publisher Date	2014-04-28
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Group Unanimity Majority Preferences Risk Ambiguity Economic Theory Game Theory/Mathematical Methods Game Theory, Economics, Social and Behav. Sciences Operations Research/Decision Theory
Content Type	Text
Resource Type	Article
Subject	Arts and Humanities Economics, Econometrics and Finance Developmental and Educational Psychology Social Sciences Decision Sciences Applied Psychology Computer Science Applications

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