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Risk-Taking Behavior: An Experimental Analysis of Individuals and Dyads

Author

Listed:
  • Cary Deck

    () (Department of Economics, University of Arkansas, WCOB 402, Fayetteville AR 72701, USA)

  • Jungmin Lee

    () (School of Economics, Sogang University, 1 Sinsu-dong, Mapo-gu, Seoul 121-742, Korea; corresponding author)

  • Javier Reyes

    () (Department of Economics, University of Arkansas, WCOB 402, Fayetteville AR 72701, USA)

  • Chris Rosen

    () (Department of Management, University of Arkansas, WCOB 407, Fayetteville AR 72701, USA)

Abstract

The decision to undertake risk is often made by pairs (dyads), while much of the economics literature on risk taking focuses on the individual. We report the results of controlled laboratory experiments that compare behavior between individuals and pairs. Using the Holt and Laury (2002) procedure and a within-subjects design, we find that pair choices are largely consistent with subjects bargaining over the outcome rather than the pairs taking a more extreme stance than the individual members. Further, gender and age but not personality seem to influence relative bargaining weight. We also find that individuals are more willing to take risks after making decisions as part of a pair than beforehand. Both the personality of one's partner and nontask social interaction influence subsequent individual risk-taking behavior.

Suggested Citation

  • Cary Deck & Jungmin Lee & Javier Reyes & Chris Rosen, 2012. "Risk-Taking Behavior: An Experimental Analysis of Individuals and Dyads," Southern Economic Journal, Southern Economic Association, vol. 79(2), pages 277-299, October.
  • Handle: RePEc:sej:ancoec:v:79:2:y:2012:p:277-299
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    File URL: http://dx.doi.org/10.4284/0038-4038-2010.026
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    Citations

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    Cited by:

    1. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    2. Besedes, Tibor & Deck, Cary & Quintanar, Sarah & Sarangi, Sudipta & Shor, Mikhael, 2011. "Free-Riding and Performance in Collaborative and Non-Collaborative Groups," MPRA Paper 33948, University Library of Munich, Germany.
    3. repec:eme:ijsepp:ijse-01-2015-0008 is not listed on IDEAS
    4. Bryan C. McCannon & Colleen Tokar Asaad & Mark Wilson, 2016. "Financial competence, overconfidence, and trusting investments: Results from an experiment," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(3), pages 590-606, July.
    5. Jana Cahlíková & Lubomír Cingl, 2017. "Risk preferences under acute stress," Experimental Economics, Springer;Economic Science Association, vol. 20(1), pages 209-236, March.
    6. Kagel, John & McGee, Peter, 2014. "Personality and cooperation in finitely repeated prisoner’s dilemma games," Economics Letters, Elsevier, vol. 124(2), pages 274-277.
    7. Antonio Filippin & Paolo Crosetto, 2016. "A Reconsideration of Gender Differences in Risk Attitudes," Management Science, INFORMS, vol. 62(11), pages 3138-3160, November.
    8. Keck, Steffen & Diecidue, Enrico & Budescu, David V., 2014. "Group decisions under ambiguity: Convergence to neutrality," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 60-71.
    9. Bryan C. McCannon & John Stevens, 2017. "Role of personality style on bargaining outcomes," International Journal of Social Economics, Emerald Group Publishing, vol. 44(9), pages 1166-1196, September.
    10. Bryan C. McCannon & Colleen Tokar Asaad & Mark Wilson, 2015. "Contracts and Trust," Working Papers 15-15, Department of Economics, West Virginia University.

    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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