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Risk taking and information aggregation in groups

Listed author(s):
  • Bougheas, Spiros
  • Nieboer, Jeroen
  • Sefton, Martin

We report a controlled laboratory experiment examining risk-taking and information aggregation in groups facing a common risk. The experiment allows us to examine how subjects respond to new information, in the form of both privately observed signals and signals reported from others. We find that a considerable number of subjects exhibit ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also find a striking degree of consensus when subjects make decisions on behalf of the group under a random dictatorship procedure. Reverse confirmation bias and the incidence of consensus are considerably reduced when group members can share signals but not communicate.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167487015000999
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Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 51 (2015)
Issue (Month): C ()
Pages: 34-47

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Handle: RePEc:eee:joepsy:v:51:y:2015:i:c:p:34-47
DOI: 10.1016/j.joep.2015.08.001
Contact details of provider: Web page: http://www.elsevier.com/locate/joep

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