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Risk Aversion, Over-Confidence and Private Information as determinants of Majority Thresholds

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  • Giuseppe Attanasi
  • Luca CORAZZINI
  • Nikolaos GEORGANTZIS
  • Francesco PASSARELLI

Abstract

We study, both theoretically and experimentally, the relation between preferred majority thresholds and behavioral traits such as the degree of risk aversion and the subjective confidence on others preferences over the alternative to vote. The main theoretical findings are supported by experimental data. The majority threshold chosen by a subject is positively and significantly correlated with her degree of risk aversion while it is negatively and significantly associated to her confidence on others’ votes. Moreover, in a treatment in which each subject can privately observe the distribution of preferences over a sub-group of participants, we find that the quality of information crowds-out subject's confidence.

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Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 09.26.302.

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Date of creation: Dec 2009
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Handle: RePEc:ler:wpaper:09.26.302

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  1. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
  2. Robert Forsythe, 1990. "An Experimental Study of Voting Rules and Polls in Three-Way Elections," Discussion Papers 927, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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