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Group and individual risk preferences : a lottery-choice experiment

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  • David Masclet

    ()
    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie, CIRANO - Centre Interuniversitaire de Recherche en ANalyse des Organisations)

  • Youenn Loheac

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Laurent Denant-Boèmont

    ()
    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)

  • Nathalie Colombier

    ()
    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)

Abstract

This paper focuses on decision making under risk, comparing group and individual risk preferences in a lottery-choice experiment inspired by Holt and Laury (2002). The experiment presents subjects with a menu of unordered lottery choices which allows us to measure risk aversion. In the individual treatment, subjects make lottery choices individually ; in the group treatment, each subject was placed in an anonymous group of three, where unanimous lottery choice decisions were made via voting. Finally, in a third treatment, called the choice treatment, subjects could choose whether to be on their own or in a group. Our main findings are that groups are more likely than individuals to choose safe lotteries for decisions with low winning percentages. Moreover, groups converge toward less risky decisions because subjects who were relatively less risk averse were more likely to change their vote in order to conform to the group average decision ; more risk-averse individuals were less likely to change their preferences. Finally our results reveal a positive relationship between preference for risk and willingness to decide alone.

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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00118973.

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Date of creation: Sep 2006
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Handle: RePEc:hal:cesptp:halshs-00118973

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Keywords: Experiment; decision rule; individual decision; group decision.;

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References

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Citations

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Cited by:
  1. Andrea Morone & Piergiuseppe Morone, 2012. "Individual and Group Behaviours in the Traveller's Dilemma: An Experimental Study," Working Papers, Economics Department, Universitat Jaume I, Castellón (Spain) 2012/09, Economics Department, Universitat Jaume I, Castellón (Spain).
  2. Ronald J. Baker II & Susan K. Laury & Arlington W. Williams, 2008. "Comparing Small-Group and Individual Behavior in Lottery-Choice Experiments," Caepr Working Papers, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington 2007-018_Updated, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  3. Roman M. Sheremeta & Jingjing Zhang, 2009. "Can Groups Solve the Problem of Overbidding in Contests?," Department of Economics Working Papers 2009-05, McMaster University.
  4. Loheac, Youenn & Combris, Pierre & Issancou, Sylvie, 2010. "Food Decision, Information And Personality," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany, European Association of Agricultural Economists;Agricultural and Applied Economics Association 116434, European Association of Agricultural Economists;Agricultural and Applied Economics Association.
  5. Klaus Abbink & Jordi Brandts & Benedikt Herrmann & Henrik Orzen, 2008. "Inter-Group Conflict and Intra-Group Punishment in an Experimental Contest Game," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 723.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  6. Besedes, Tibor & Deck, Cary & Quintanar, Sarah & Sarangi, Sudipta & Shor, Mikhael, 2011. "Free-Riding and Performance in Collaborative and Non-Collaborative Groups," MPRA Paper 33948, University Library of Munich, Germany.
  7. Iván Arribas & Penélope Hernández & Amparo Urbano Salvador & Jose E. Vila, 2012. "Are social and entrepreneurial attitudes compatible? A behavioral and self-perceptional analysis," Discussion Papers in Economic Behaviour, University of Valencia, ERI-CES 0512, University of Valencia, ERI-CES.
  8. Philomena M. Bacon & Peter Moffatt, 2010. "Mortgage Choice as a Natural Field Experiment on Choice Under Risk," University of East Anglia Applied and Financial Economics Working Paper Series, School of Economics, University of East Anglia, Norwich, UK. 020, School of Economics, University of East Anglia, Norwich, UK..
  9. Daniela Di Cagno & Emanuela Sciubba & Marco Spallone, 2012. "Choosing a gambling partner: testing a model of mutual insurance in the lab," Theory and Decision, Springer, Springer, vol. 72(4), pages 537-571, April.

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