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Moderation in Groups: Evidence from Betting on Ice Break-ups in Alaska

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  • Renée Adams
  • Daniel Ferreira

Abstract

We use a large sample of guessed ice break-up dates for the Tanana River in Alaska to study differences between outcomes of decisions made by individuals versus groups. We estimate the distribution of guesses conditional on whether they were made by individual bettors or betting pools. We document two major distinctions between the two sets of guesses: (1) the distribution of guesses made by groups of bettors appears to conform more to the distribution of historical break-up dates than the distribution of guesses made by individual bettors, and (2) the distribution for groups has less mass in its tails and displays lower variability than the distribution for individuals. We argue that these two pieces of evidence are consistent with the hypothesis that group decisions are more moderate, either because groups have to reach a compromise when their members disagree or because individuals with extreme opinions are less likely to be part of a group. Copyright , Wiley-Blackwell.

Suggested Citation

  • Renée Adams & Daniel Ferreira, 2010. "Moderation in Groups: Evidence from Betting on Ice Break-ups in Alaska," Review of Economic Studies, Oxford University Press, vol. 77(3), pages 882-913.
  • Handle: RePEc:oup:restud:v:77:y:2010:i:3:p:882-913
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2009.00594.x
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    Cited by:

    1. Huang, Ying Sophie & Wang, Chia-Jane, 2015. "Corporate governance and risk-taking of Chinese firms: The role of board size," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 96-113.
    2. Azmat, Ghazala & Petrongolo, Barbara, 2014. "Gender and the labor market: What have we learned from field and lab experiments?," Labour Economics, Elsevier, vol. 30(C), pages 32-40.
    3. Aman, Hiroyuki & Nguyen, Pascal, 2013. "Does good governance matter to debtholders? Evidence from the credit ratings of Japanese firms," Research in International Business and Finance, Elsevier, vol. 29(C), pages 14-34.
    4. Morone, Andrea & Nuzzo, Simone & Caferra, Rocco, 2016. "The Dollar Auction Game: A laboratory comparison between Individuals and Groups," MPRA Paper 72608, University Library of Munich, Germany.
    5. Berger, Allen N. & Kick, Thomas & Schaeck, Klaus, 2014. "Executive board composition and bank risk taking," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 48-65.
    6. XU Peng, 2017. "Foreign Institutional Ownership and Risk Taking," Discussion papers 17061, Research Institute of Economy, Trade and Industry (RIETI).
    7. XU Peng, 2015. "Risk-taking and Firm Growth," Discussion papers 15061, Research Institute of Economy, Trade and Industry (RIETI).
    8. Ongena, Steven & Tümer-Alkan, Günseli & Vermeer, Bram, 2011. "Corporate choice of banks: Decision factors, decision maker, and decision process -- First evidence," Journal of Corporate Finance, Elsevier, vol. 17(2), pages 326-351, April.
    9. repec:eee:jfinec:v:125:y:2017:i:3:p:417-433 is not listed on IDEAS
    10. patel, saurin & sarkissian, sergei, 2012. "To Group or Not to Group? Evidence from Mutual Funds," MPRA Paper 38496, University Library of Munich, Germany.
    11. Klemens Keldenich & Marcus Klemm, 2014. "Double or nothing?! Small groups making decisions under risk in “Quiz Taxi”," Theory and Decision, Springer, vol. 77(2), pages 243-274, August.
    12. Nguyen, Pascal, 2012. "The impact of foreign investors on the risk-taking of Japanese firms," Journal of the Japanese and International Economies, Elsevier, vol. 26(2), pages 233-248.
    13. Bernd Frick & Franziska Prockl, 2018. "Information Precision In Online Communities: Player Valuations On Www.Transfermarkt.De," Working Papers Dissertations 37, Paderborn University, Faculty of Business Administration and Economics.
    14. Humphreys, Brad R. & Perez, Levi, 2013. "Syndicated play in lottery games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 124-131.

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