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Risk taking and information aggregation in groups

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  • Bougheas, Spiros
  • Nieboer, Jeroen
  • Sefton, Martin

Abstract

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.

Suggested Citation

  • Bougheas, Spiros & Nieboer, Jeroen & Sefton, Martin, 2015. "Risk taking and information aggregation in groups," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 34-47.
  • Handle: RePEc:eee:joepsy:v:51:y:2015:i:c:p:34-47
    DOI: 10.1016/j.joep.2015.08.001
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    References listed on IDEAS

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    Cited by:

    1. repec:kap:expeco:v:21:y:2018:i:2:d:10.1007_s10683-017-9538-z is not listed on IDEAS
    2. Marcel Fafchamps & Di Mo, 2018. "Peer effects in computer assisted learning: evidence from a randomized experiment," Experimental Economics, Springer;Economic Science Association, vol. 21(2), pages 355-382, June.

    More about this item

    Keywords

    Group behavior; Teams; Decision making; Risk; Experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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