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Choice Shifts in Groups

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  • Kfir Eliaz
  • Debraj Ray

Abstract

The phenomenon of "choice shifts" in group decision-making is fairly ubiquitous in the social psychology literature. Faced with a choice between a ``safe" and ``risky" decision, group members appear to move to one extreme or the other, relative to the choices each member might have made on her own. Both risky and cautious shifts have been identified in different situations. This paper demonstrates that from an individual decision-making perspective, choice shifts may be viewed as a systematic violation of expected utility theory. We propose a model in which a well-known failure of expected utility - captured by the Allais paradox - is equivalent to a particular configuration of choice shifts. Thus, our results imply a connection between two well-known behavioral regularities, one in individual decision theory and another in the social psychology of groups

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 205.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:205

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Keywords: Choice Shifts; Disappointment Aversion; Allais Paradox;

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References

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  1. Grant, Simon & Kajii, Atsushi & Polak, Ben, 2001. "Different notions of disappointment aversion," Economics Letters, Elsevier, vol. 70(2), pages 203-208, February.
  2. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
  3. GRANT, Simon & KAJII, Atsushi, 1994. "Ausi Expected Utility : An Anticipated Utility Theory of Relative Disappointment Aversion," CORE Discussion Papers 1994045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Gul, Faruk, 1991. "A Theory of Disappointment Aversion," Econometrica, Econometric Society, vol. 59(3), pages 667-86, May.
  5. Battaglini, Marco & Bénabou, Roland & Tirole, Jean, 2002. "Self Control in Peer Groups," CEPR Discussion Papers 3149, C.E.P.R. Discussion Papers.
  6. Timothy Feddersen & Wolfgang Pesendorfer, 1996. "Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts," Discussion Papers 1170, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by:
  1. Brady, Michael P. & Wu, Steven Y., 2008. "The Effect of Intragroup Communication on Preference Shifts in Groups," IZA Discussion Papers 3429, Institute for the Study of Labor (IZA).
  2. Attila Ambrus & Ben Greiner & Parag Pathak, 2009. "Group Versus Individual Decision-Making: Is there a shift?," Economics Working Papers 0091, Institute for Advanced Study, School of Social Science.
  3. Brady, Michael P. & Roe, Brian E. & Wu, Steven Y., 2006. "Group versus Individual Preferences for Risk: An Experimental Analysis of the Effect of Group Composition," 2006 Annual meeting, July 23-26, Long Beach, CA 21056, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Brady, Michael P. & Wu, Steven Y., 2010. "The aggregation of preferences in groups: Identity, responsibility, and polarization," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 950-963, December.

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