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Group versus Individual Preferences for Risk: An Experimental Analysis of the Effect of Group Composition

Author

Listed:
  • Brady, Michael P.
  • Roe, Brian E.
  • Wu, Steven Y.

Abstract

Greater attention has been paid to understanding differences between individual and group decision-making in economics in recent years. While great strides have been made in understanding the relative cognitive ability of each, differences in preferences are less well understood. This study examined preferences for risk individually and in groups of two. Results show that a majority of groups act according to the preferences of one of the two pair members. This is not a result emphasized in previous social psychology research on groups. Thus, we propose a new explanation of group decision making based on strength of preference.

Suggested Citation

  • Brady, Michael P. & Roe, Brian E. & Wu, Steven Y., 2006. "Group versus Individual Preferences for Risk: An Experimental Analysis of the Effect of Group Composition," 2006 Annual meeting, July 23-26, Long Beach, CA 21056, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea06:21056
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    File URL: http://purl.umn.edu/21056
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    References listed on IDEAS

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    1. Sutter, Matthias, 2005. "Are four heads better than two? An experimental beauty-contest game with teams of different size," Economics Letters, Elsevier, vol. 88(1), pages 41-46, July.
    2. Blinder, Alan S & Morgan, John, 2005. "Are Two Heads Better than One? Monetary Policy by Committee," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(5), pages 789-811, October.
    3. David J. Cooper & John H. Kagel, 2005. "Are Two Heads Better Than One? Team versus Individual Play in Signaling Games," American Economic Review, American Economic Association, vol. 95(3), pages 477-509, June.
    4. Gary Bornstein & Ilan Yaniv, 1998. "Individual and Group Behavior in the Ultimatum Game: Are Groups More “Rational” Players?," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 101-108, June.
    5. Cason, Timothy N & Mui, Vai-Lam, 1997. "A Laboratory Study of Group Polarisation in the Team Dictator Game," Economic Journal, Royal Economic Society, vol. 107(444), pages 1465-1483, September.
    6. Kfir Eliaz & Debraj Ray, 2004. "Choice Shifts in Groups," Econometric Society 2004 North American Summer Meetings 205, Econometric Society.
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    Keywords

    Risk and Uncertainty;

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