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

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Author Info
Giuseppe Attanasi, Luca Corazzini, Nikolaos Georgantzis, Francesco Passarelli.

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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 alternatives 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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Publisher Info
Paper provided by ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy in its series ISLA Working Papers with number 34.

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Length: 34 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:slp:islawp:islawp34

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Related research
Keywords: majority threshold; risk aversion; (over-)confidence; laboratory experiment.;

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. André Blais & Marc André Bodet, 2006. "How Do Voters Form Expectations about the Parties' Chances of Winning the Election?," Social Science Quarterly, The Southwestern Social Science Association, vol. 87(3), pages 477-493. [Downloadable!] (restricted)
  2. Enriqueta Aragonés & Andrew Postlewaite, 1999. "Ambiguity in Election Games," Economics Working Papers 364, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  3. Daniel Dorn & Gur Huberman, 2005. "Talk and Action: What Individual Investors Say and What They Do," Review of Finance, Oxford University Press for European Finance Association, vol. 9(4), pages 437-481. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!]
  5. Uriel Procaccia & Uzi Segal, 2003. "Super Majoritarianism and the Endowment Effect," Theory and Decision, Springer, vol. 55(3), pages 181-207, November. [Downloadable!]
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  6. Casella, Alessandra & Gelman, Andrew & Palfrey, Thomas R., 2006. "An experimental study of storable votes," Games and Economic Behavior, Elsevier, vol. 57(1), pages 123-154, October. [Downloadable!] (restricted)
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  7. Menkhoff, Lukas & Schmidt, Ulrich & Brozynski, Torsten, 2006. "The impact of experience on risk taking, overconfidence, and herding of fund managers: Complementary survey evidence," European Economic Review, Elsevier, vol. 50(7), pages 1753-1766, October. [Downloadable!] (restricted)
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  8. Buchanan, James M & Faith, Roger L, 1981. "Entrepreneurship and the Internalization of Externalities," Journal of Law & Economics, University of Chicago Press, vol. 24(1), pages 95-111, April.
  9. Harrington, Joseph E, Jr, 1990. " The Role of Risk Preferences in Bargaining When Acceptance of a Proposal Requires Less than Unanimous Approval," Journal of Risk and Uncertainty, Springer, vol. 3(2), pages 135-54, June.
  10. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March. [Downloadable!] (restricted)
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This page was last updated on 2009-11-18.


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