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How Group Size and Decision Rules Impact Risk Preferences: Comparing group and individual settings in lottery-choice experiments

Author

Listed:
  • Fukutomi, Masao
  • Ito, Nobuyuki
  • Mitani, Yohei
Abstract
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.

Suggested Citation

  • Fukutomi, Masao & Ito, Nobuyuki & Mitani, Yohei, 2022. "How Group Size and Decision Rules Impact Risk Preferences: Comparing group and individual settings in lottery-choice experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    • Handle: RePEc:eee:soceco:v:98:y:2022:i:c:s2214804322000489
    DOI: 10.1016/j.socec.2022.101873
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    References listed on IDEAS

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    More about this item

    Keywords

    Group decision; group decision rules; group size; risk preference; lottery choice experiments; peer pressure;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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