Comparing Group and Individual Choices Under Risk and Ambiguity: An Experimental Study

26 Pages Posted: 10 May 2011 Last revised: 8 Sep 2011

See all articles by Brunette Marielle

Brunette Marielle

LEF-ENGREF-INRA

Laure Cabantous

Cass Business School, City University London

Stephane Couture

ESR-INRA

Date Written: May 10, 2011

Abstract

In this paper, we build on the emerging literature on group decision-making to study the so-called ‘group shift’ effect, i.e., groups are less risk-averse than individuals. Our study complements past research in two ways. First, we study the group shift effect under two sources of uncertainty, namely risk where probabilities are known, and ambiguity where probabilities are imprecise. Second, we study the impact of the group decision rule (unanimity and majority) on group shift. Results from a lottery-choice experiment show a general tendency for the group shift effect, regardless of the decision rule. The group shift effect, however, is found to be significant only under risk in the unanimity treatment. Our study hence provides a clear test of the effect of the decision rule on the group shift effect under both risk and ambiguity.

Keywords: collective decision, unanimity, majority, preferences, risk, ambiguity

JEL Classification: C91, C92

Suggested Citation

Marielle, Brunette and Cabantous, Laure and Couture, Stephane, Comparing Group and Individual Choices Under Risk and Ambiguity: An Experimental Study (May 10, 2011). Nottingham University Business School Research Paper No. 2011-03, Available at SSRN: https://ssrn.com/abstract=1837632

Brunette Marielle

LEF-ENGREF-INRA ( email )

14 rue Girardet
Nancy, 54042
France

Laure Cabantous (Contact Author)

Cass Business School, City University London ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Stephane Couture

ESR-INRA

Chemin de Borde-Rouge
Auzeville B.P. 27
Castanet-Tolosan Cedex, 31326
France

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