How Group Size and Decision Rules Impact Risk Preferences: Comparing group and individual settings in lottery-choice experiments

This paper contributes to the literature that explores the differences in individual risk attitudes between group and individual conditions. We use lottery-choice experiments to investigate the group effects on individual risk attitudes with three kinds of group decision rules: majority voting, unanimity voting, and face-to-face unanimous rules. We also compare group effects between small groups of three members and large groups of fifteen. Our main findings are three-fold. First, we find that the lotteries which are chosen by the majority of members in the individual condition are even more frequently chosen by members in the group condition under both the unanimity and face-to-face unanimous rules. Second, this group effect on individual risk attitudes is greater in small groups than in large groups under the unanimity rule. On the other hand, the group effect is independent of the group size under the face-to-face unanimous rule. Third, individuals who change their choice under these two conditions are more likely to be minority members in their choices in the individual condition. Our results suggest that observed group effects might be explained because minority members who feel peer pressure change their choices to be more aligned with the majority choice in a group.