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Most decision-making research in economics focuses on individual decisions. Yet, we know, from psychological research in particular, that individual preferences can be sensitive to social pressures. In this paper, we study the impact of a group environment on individual preferences for risky (i.e., known probabilities) and ambiguous (i.e., unknown...
Contexts in source publication
Context 1
... result is in line with the Wilcoxon test result above, and confirms the finding that in our experiment individual attitudes to risk were not significantly impacted by the group environment. Table 2 provides the results of a random effect probit model with the safe choice (option A) as the dependent variable. ...
Context 2
... to complement these analyses, we ran a random effect probit model using the non-ambiguous choice (option A) as the dependent variable. Table 2 reports the results of this model. It shows that two standard demographic variables (Age and Gender) do not significantly affect the probability of choosing the non-ambiguous option. ...
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Citations
... C5a: biological and social functions of social hierarchies (Sidanius andPratto 1999, Tibbetts et al. 2022) C5b: need to justify the system to preserve a positive self image (Jost et al. 2004) C5c: maintenance of positive group image (Jost and Hunyady 2003) C5d: belief in a just world (Lerner 2003) S5: reducing uncertainty-threat to reduce ideological defense of the status quo (Federico and Deason 2011) 6. Collective resistance to responsibilization C6: challenging truth claims (Döbbe and Cederberg 2023) 7. Group polarization C7a: desire to gain acceptance and be perceived positively by group members (Isenberg 1986) C7b: persuasive arguments (Isenberg 1986) C7c: conformity to a polarized norm (Hogg et al. 1990) S7: deliberative norms (Strandberg et al. 2019) 8. Group shift or risky shift C8a: cultural positive value of risk (e.g., Carlson and Davis 1971) C8b: diffusion of responsibility (Forsyth 1990) S8: unanimity rule instead of majority rule (Brunette et al. 2015) Psychological reactance (barrier 3 in Table 1) refers to defense mechanisms that appear when people think that their freedom is threatened (Steindl et al. 2015). For instance, in the case of climate change, communications about the importance of climate change and how to mitigate it can be viewed as a limitation of freedom for some people, yielding an opposite effect of what these communications intend (Chan and Lin 2022). ...
... Finally, group shift or risky shift (barrier 8, Table 2) refers to group decisions that are sometimes more risky than individual decisions, depending on various factors. For instance, Brunette et al. (2015) show decisions from a "unanimity rule"-based group are riskier than decisions from a "majority rule"-based group. ...
... Because of uncertainties around climate change, risky shifts (barrier 8, Table 2) may emerge from people with a cultural inclination to risk-taking (e.g., Carlson and Davis 1971) and from populations with diffused responsibility (Forsyth 1990). Brunette et al. (2015) show that unanimity rule instead of majority rule during debates may mitigate these tendencies. ...
... In most choice problems involving a safe and a risky option, groups tend to take more risk (risky shifts), but in some types of lottery decisions the opposite is observed (cautious shift). Zhang and Casari (2012), and Brunette et al. (2015) observe that individuals when in a group (of strangers) tend to be less risk averse (with weak or strong unanimity decision rule) while Morone et al. (2021b) results clearly display that individuals are more risk seekers than groups (of strangers) when confronted with gambles with positive expected payoff difference while being more risk averse in the opposite case. ...
Purpose
The authors believe that comparing individuals to groups' decision making is crucial provided that many important choices in society are made by groups, i.e. committees, governing bodies, juries, business partners and families. This study aims to discuss the aforementioned topic.
Design/methodology/approach
The authors analyze risky decision making in the context of the television game show Deal or No Deal – Italian edition. Specifically, the authors scrutinize and compare individual (standard “Deal or No Deal” edition) and group (special edition) choices in the risky choice context provided by programe.
Findings
After analyzing contestant's behavior in the standard edition episodes plus a special edition the authors calculate a risk index observing that no statically significant difference is present between individuals' and groups' actions.
Originality/value
In the “Deal or No Deal” special edition contestant were groups of two strangers. It is not uncommon to have couples playing on TV, however the individuals usually know each other well and have relationships in real life. The special edition therefore provides a unique setting (absent to best of the authors’ knowledge in the literature) for investigation and could offer real-world insight. Indeed, in many instances the authors have to contract/make decisions with people the authors do not know/know very little (i.e. occasional business partners, representative at other companies/institutions, insurance/finance advisors, new work colleagues, etc.).
... Because of the important role of risk in economic decisions, the existing literature has investigated the impact of a group environment on risk attitudes (Shupp and Williams 2008;Zhang and Casari 2012). Most of the studies used the paired lottery-choice experiment of Holt and Laury (2002) to elicit individuals' risk attitudes (Baker et al., 2008;Masclet et al., 2009;Harrison et al., 2013;Ambrus et al., 2015;Brunette et al., 2015). Subjects make 10 sequential decisions between a safe lottery and a risky lottery, with winning probabilities ranging from 10% to 100%. ...
... Since subjects should switch from the safe lottery to the risky lottery at a certain point, the crossover point can be used to infer their risk attitudes. In a group environment, lottery choices made individually by group members are aggregated into a collective risk attitude by usually using a majority rule or a unanimity rule (Baker et al., 2008;Masclet et al., 2009;Harrison et al., 2013;Brunette et al., 2015). ...
... Early studies investigated the aggregate, collective risk attitudes of individual members of a group (Baker et al., 2008;Shupp and Williams 2008;Ambrus et al., 2009;Zhang and Casari 2012), while an increasing number of studies have focused on the difference between individual proposals (prior to aggregation) in a group environment and individual risk attitudes elicited in an individual environment (Masclet et al., 2009;Viscusi et al., 2011;Harrison et al., 2013;Brunette et al., 2015). A main finding from the latter literature is that the impact of a group environment on individual risk attitudes differs by group decision-making rules. ...
This paper contributes to the literature that explores the differences in individual risk attitudes between group and individual conditions. We use lottery-choice experiments to investigate the group effects on individual risk attitudes with three kinds of group decision rules: majority voting, unanimity voting, and face-to-face unanimous rules. We also compare group effects between small groups of three members and large groups of fifteen. Our main findings are three-fold. First, we find that the lotteries which are chosen by the majority of members in the individual condition are even more frequently chosen by members in the group condition under both the unanimity and face-to-face unanimous rules. Second, this group effect on individual risk attitudes is greater in small groups than in large groups under the unanimity rule. On the other hand, the group effect is independent of the group size under the face-to-face unanimous rule. Third, individuals who change their choice under these two conditions are more likely to be minority members in their choices in the individual condition. Our results suggest that observed group effects might be explained because minority members who feel peer pressure change their choices to be more aligned with the majority choice in a group.
... The literature also demonstrates that subjects' communication among themselves prior to decision-making changes their risk and ambiguity aversions on choices over uncertain prospects (Engle-Warnick & Laszlo, 2017;Ahsanuzzaman, 2015;Chung, Christopoulos, King, Ball & Chiu, 2015;Fershtman & Segal, 2018). Sometimes, the behavior of others influences own decisions (Brunette, Cabantous & Couture, 2015;Fershtman & Segal, 2018;Jackson, 2014) due to, among other factors, the type of people the agents choose to communicate with leading to a group members' selection effect on individuals' attitudes toward uncertainty. A thorough investigation of group selection effect may be helpful in designing interventions for any specific group of people and informing policy to attain the desired outcome. ...
... Sometimes, farmers mimic other farmers' farming practices if they are convinced that those are better practices and therefore generate higher profits. Thus, the decision-making in a group-setting may be such that decisions made by other group members influence own choices (Brunette, Cabantous, & Couture, 2015;Fershtman & Segal, 2018;Jackson, 2014); and this group effect may in part be influenced by who the agents choose to communicate with, which we call group selection effect. It is important to examine both the extent and the direction, if any, of effects of communication among individuals on their attitudes toward uncertainty. ...
... The results reported in Table 8 (left panel) suggest that farmersboth men and womenmostly exhibit ambiguity neutral to mild ambiguity averse behavior when deciding alone, which is consistent with studies that investigate ambiguity aversion (Akay et al., 2012;Ahsanuzzaman, 2015). Similar results are observed when decisions are made in consultation with group members (Table 8-right panel) that is not significantly different from that in-alone scenario contrasting the findings in Brunette et al. (2015). In addition, participants' ambiguity attitudes tend to be more ambiguity averse as it is measured comparing with the increased winning probability in the comparable risk rounds both in case of decision made alone and in-consultation with group members. ...
In this paper, we conduct lab-in-field experiments using a sample of 206 farmers in Bangladesh and perform four main tasks related to measuring the farmers’ attitudes toward risk and ambiguity in both gain and loss domains: (i) measure the effect of communication and group members’ characteristics on risk and ambiguity attitudes, (ii) investigate the effect of group selection on risk and ambiguity attitudes, (iii) investigate the effect of seasonal variation on risk and ambiguity attitudes, and (iv) study the gender disparity in the measured attitudes in different environments. Our experiments yield the following key results. First, farmers exhibit higher risk and ambiguity aversions when they make choices in groups compared to choosing alone. In addition, group members’ characteristics such as social stature, literacy, etc. are important factors that influence farmers’ measured behavioral attributes after communication. Second, farmers are less risk-averse but more ambiguity-averse when group members are self-selected relative to when they are randomly assigned. Third, farmers in our sample are substantially more risk averse during the pre-harvest season compared to the post-harvest season. Finally, women tend to be more risk and ambiguity averse than men in all dimensions as male farmers tend to make more extreme choices than females.
... The effect of information friction appears highest among risk-loving, prudent, temperate homeowners. To explain this result, we lean on results from our WTP theory and argue that homeowners who are risk-lovers are also ambiguity-lovers (Brunette et al., 2014). Exposing this group to the video information treatment reduces their ambiguity around the effectiveness of Fortified and the uncertainty of wealth, thereby negatively affecting their WTP for the precaution. ...
... Indeed, the question of the link between an individual's risk and ambiguity preferences has been addressed in experimental economics with a conclusion that is not unanimous. Lauriola and Levin (2001), Chakravarty and Roy (2009) and Brunette et al. (2015) found a positive and significant correlation between risk and ambiguity preferences in the gain domain, whereas other experiments found that these two preferences are not closely related (Cohen et al., 1987;Hogarth and Einhorn, 1990;Mauro and Maffioletti, 2004;Levy et al., 2010). Many empirical and experimental papers have confirmed the risk aversion and ambiguity aversion of decision-makers but without addressing the question of the link between these two types of preferences. ...
... The analysis of the links between both types of preferences proves that the preferences towards risk and ambiguity are significantly and positively correlated within each experiment (Result 2). This result is in accordance with some articles in the literature (Lauriola and Levin, 2001;Chakravarty and Roy, 2009;Brunette et al., 2015). It also encourages us to focus on the alignment or not of the individuals' preferences towards risk and ambiguity. ...
... See for example (Winter et al., 1973). (Abdellaoui et al., 2013b;Bateman and Munro, 2005;Carlsson et al., 2013;De Palma et al., 2011) and six study groups of unrelated members (Baker et al., 2011;Brunette et al., 2015;Harrison et al., 2012;Masclet et al., 2009;Shupp and Williams, 2008;Zhang and Casari, 2012). ...
Humans make intertemporal decisions under uncertainty as individuals and in groups. Time and risk preferences are well studied in the context of individual decision-making, but much less attention has been paid to contexts of group decision-making, particularly married adults. Married couples often make important decisions jointly, such as decisions about household finances or children's education. We elicit the preferences of individuals, married couples, and unrelated pairs in an incentivized field experiment. By contrasting the choices of married couples and unrelated pairs of adults, we also shed light on whether divergences in choices between individuals and couples arise from attributes intrinsic to the married pair or from a “group effect”. We find that the decisions of both individuals and pairs are best characterized by Rank Dependent Utility with risk aversion and optimistic attitudes towards probabilities, high discount rates, and no present bias. The joint decisions of married couples and unrelated pairs exhibit more impatience than the constituent individuals’ decisions and this difference is similar for both types of pairs, implying only a “group effect” on time preferences. In contrast, the risk preferences of married couples and unrelated pairs are similar to the preferences of their constituent individuals.
... For example, collective decision making has been associated with less discounting and fewer time inconsistencies [11]. Other existing work on the effects of collective decisionmaking gives less firm results, with mixed evidence being reported for risk aversion [12][13][14][15][16], ambiguity aversion [13,17,18] and the violation rate of EU [19][20][21]. When effects of collective decision making occur, they are hypothesized to result from the deliberation, bargaining and exchange of information that takes place when deciding collectively (e.g. ...
... For example, collective decision making has been associated with less discounting and fewer time inconsistencies [11]. Other existing work on the effects of collective decisionmaking gives less firm results, with mixed evidence being reported for risk aversion [12][13][14][15][16], ambiguity aversion [13,17,18] and the violation rate of EU [19][20][21]. When effects of collective decision making occur, they are hypothesized to result from the deliberation, bargaining and exchange of information that takes place when deciding collectively (e.g. ...
... For example, discounting of future life years leads to downwards bias in TTO [22][23][24], and if such discounting is lower in when individuals decide in a group [11] this could lead to higher TTO weights. Similarly, if groups are more willing to take risks [13], perhaps due to reduced overweighting of small probabilities of dying, this could yield lower SG weights. If such effects occur simultaneously, the difference between SG and TTO might reduce. ...
Quality-Adjusted Life-Years (QALYs) are typically derived from individual preferences over health episodes. This paper reports the first experimental investigation into the effects of collective decision making on health valuations, using both time trade-off (TTO) and standard gamble (SG) tasks. We investigated collective decision making in dyads, by means of a mixed-subjects design where we control for learning effects. Our data suggest that collective decision making has little effect on decision quality, as no effects were observed on decision consistency and monotonicity for both methods. Furthermore, QALY weights remained similar between individual and collective decisions, and the typical difference in elicited weights between TTO and SG was not affected. These findings suggest that consulting with others has little effect on health state valuation, although learning may have. Additionally, our findings add to the literature of the effect of collective decision making, suggesting that no such effect occurs for TTO and SG.
... The coefficient of ambiguity aversion being a descending variable, this result shows that more risk aversion is correlated with more ambiguity aversion. This result is in line with previous ones indicating a significant and positive correlation between risk and ambiguity preferences (Lauriola and Levin, 2001;Chakravarty and Roy, 2009;Brunette et al., 2015). ...
In a context of climate change, the agricultural sector offers a potential of mitigation. However, most of the farmers do not adopt the mitigation practices recommended, among them the reduction of nitrogen fertilization. In parallel, various uncertainties characterize agricultural production, so that farmer's risk and ambiguity preferences may be potential determinants to the adoption (or not) of mitigation practices. This is precisely the objective of this paper to explore this way. For that purpose, we realize a questionnaire submitted to French farmers where we elicit risk and ambiguity preferences through simple lottery choices, and then we ask questions about the farmer's fertilization decisions. We show that risk aversion as well as ambiguity aversion impact fertilization practices, through diverse drivers and in an opposite direction. This result implies that fertilization practices are more complex than only classic risk-related behaviors. The incentive approaches associated with mitigation and fertilization have to take into account this complexity.
... Charness et al. (2013) show that ambiguity neutral agents are able to persuade the non-neutral ones to make joint, ambiguityneutral decisions, Keck et al. (2014) find that groups are inclined to make more ambiguity neutral decisions and that ambiguity averse individuals tend to become ambiguity neutral after they consult with their peers. Brunette et al. (2015) report that groups applying the unanimity rule are less risk averse. They found the same pattern for ambiguity but without significance. ...
... In the field of group decision making under ambiguity, in contrast to Charness et al. (2013), Keck et al. (2014) and Brunette et al. (2015) who compare groups and individuals in a static framework, using a life-cycle experimental design, we report the first experiment that studies dynamic group decision making under ambiguity in a task that involves learning and updating of ambiguous beliefs. Generally the experimental literature on dynamic decision making under ambiguity (updating and learning) is very limited. ...
This paper focuses on the comparison of individual and group decision-making, in a stochastic inter-temporal problem in two decision environments, namely risk and ambiguity. Using a consumption/saving laboratory experiment, we investigate behaviour in four treatments: (1) individual choice under risk; (2) group choice under risk; (3) individual choice under ambiguity and (4) group choice under ambiguity. Comparing decisions within and between decision environments, we find an anti-symmetric pattern. While individuals are choosing on average closer to the theoretical optimal predictions, compared to groups in the risk treatments, groups tend to deviate less under ambiguity. Within decision environments, individuals deviate more when they choose under ambiguity, while groups are better planners under ambiguity rather than under risk. Our results extend the often observed pattern of individuals (groups) behaving more optimally under risk (ambiguity), to its dynamic dimension.
