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On the consensus effect

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  • Dillenberger, David
  • Raymond, Collin

Abstract

Individuals often tend to conform to the choices of others in group decisions, compared to choices made in isolation. We show that this behavior — which we term the consensus effect — is equivalent to a well-known violation of expected utility, namely strict quasi-convexity of preferences, which is shared by many popular non-expected utility models. In contrast to the equilibrium outcome when individuals are expected utility maximizers, quasi-convexity of preferences imply that group decisions may fail to properly aggregate preferences and strictly Pareto-dominated equilibria may arise.

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  • Dillenberger, David & Raymond, Collin, 2019. "On the consensus effect," Journal of Economic Theory, Elsevier, vol. 183(C), pages 384-416.
    • Handle: RePEc:eee:jetheo:v:183:y:2019:i:c:p:384-416
    DOI: 10.1016/j.jet.2019.07.002
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    More about this item

    Keywords

    Aggregation of preferences; Choice shifts in groups; Consensus effect; Non-expected utility; Quasi-convex preferences;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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