Comparing Group and Individual Choices Under Risk and Ambiguity: An Experimental Study
26 Pages Posted: 10 May 2011 Last revised: 8 Sep 2011
Date Written: May 10, 2011
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: Suggested Citation