Group Decisions Under Ambiguity: Convergence to Neutrality
38 Pages Posted: 16 Apr 2012
Date Written: April 16, 2012
Abstract
This paper focuses on decisions under ambiguity. Participants in a laboratory experiment made decisions in three different settings: (a) individually, (b) individually after discussing the decisions with others, and (c) in groups of three. We show that groups are more likely to make ambiguity-neutral decisions than individuals, and that individuals make more ambiguity-neutral decisions after discussing the decisions with others. This shift towards higher ambiguity neutrality in groups and after a group discussion is associated with a reduction in the rates of both ambiguity aversion and ambiguity seeking. We attribute the results to the effective and persuasive communication that takes place in groups.
Keywords: ambiguity, group decision making, imprecision, risk, vagueness
JEL Classification: C92, D71, D81
Suggested Citation: Suggested Citation
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