Choice Shifts in Groups
AbstractThe 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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Date of creation: 11 Aug 2004
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Choice Shifts; Disappointment Aversion; Allais Paradox;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-16 (All new papers)
- NEP-EVO-2004-08-16 (Evolutionary Economics)
- NEP-POL-2004-08-16 (Positive Political Economics)
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