Group Decisions Under Ambiguity: Convergence to Neutrality

Keck, Steffen; Diecidue, Enrico; Budescu, David V.

doi:10.2139/ssrn.2040655

Cited by 17 publications

(18 citation statements)

References 47 publications

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“…In the case of real group decision, such a result is characteristic of a "risky shift" (Wallach et al 1964;Brown 1986;Aronson et al 2005). In addition, this result extends the "other-evaluation" argument developed under ambiguity (Curley et al 1986;Trautman et al 2008;Keck et al 2012) to risk: individuals, in making a choice, anticipate that others will evaluate her/his decision, and so, make the choice that is perceived to be most justifiable to others, the less risky one.…”

Section: Insert Figures 3 and 4 Heresupporting

confidence: 72%

Are individuals more risk and ambiguity averse in a group environment or alone? Results from an experimental study

Brunette,

Cabantous,

Couture

2014

Theory Decis

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This is the accepted version of the paper.This version of the publication may differ from the final published version. 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 probabilities) prospects. In our experiment, each participant was invited to make a series of lottery-choice decisions in two different conditions. In the Alone condition, individuals made private choices whereas in the Group condition, individuals belonged to a three-person group and groupmembers' choices were aggregated according to either a majority or unanimity rule. This design allows us to study the impact of a group environment on individuals' attitude towards both risky and ambiguous prospects while controlling for the decision rule used in the group. Our experimental results show that when individuals are in the Group condition, they tend to be less risk averse and more ambiguity averse than when they are not part of a group (Alone condition). Our experiment also suggests that the decision rule matters as it shows that these two trends tend to be stronger when the group implements a unanimity rule. Specifically, we found that individuals who belong to a group implementing a unanimity rule are significantly less risk averse than individuals who belong to a group that relies on the majority rule. We obtained a similar -but non-significant -result under ambiguity. Permanent repository link

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Section: Insert Figures 3 and 4 Heresupporting

confidence: 72%

Are individuals more risk and ambiguity averse in a group environment or alone? Results from an experimental study

Brunette,

Cabantous,

Couture

2014

Theory Decis

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“…This approach, however, seems practically impossible, given the large amount of available financial data and the attention this data generates.3Bär et al (2011) document that teams of fund managers implement less extreme investment styles and less industry concentrated portfolios. In an experimentRockenbach et al (2007) find that team decisions are better in line with Portfolio Selection Theory than individual decisions, leading to a better risk-return ratio Keck et al (2014). demonstrate that groups are more likely than individuals to make ambiguity-neutral decisions.…”

mentioning

confidence: 94%

Hot hand and gambler's fallacy in teams: Evidence from investment experiments

Stöckl

Huber

Kirchler

et al. 2015

Journal of Economic Behavior & Organization

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a b s t r a c tIn laboratory experiments we explore the effects of communication and group decision making on investment behavior and on subjects' proneness to behavioral biases. Most importantly, we show that communication and group decision making do not impact subjects' overall proneness to the hot hand fallacy and to the gambler's fallacy. However, groups decide differently than individuals, as they rely significantly less on useless outside advice from "experts" and choose the risk-free option less frequently. Furthermore we document gender differences in investment behavior: groups of two female subjects choose the riskfree investment more often and are marginally more prone to the hot hand fallacy than groups of two male subjects.

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“…There is a literature on how choices under ambiguity are affected by letting people choose or at least discuss their choices in groups. While Keller et al [2007] find no substantial difference in behavior in single person decisions and decisions by groups of two individuals, Keck et al [2014] find that "[g]roups are more likely to make ambiguity neutral decisions than individuals" and "[i]ndividuals make more ambiguity neutral decisions after a group discussion". Similarly, Charness et al [2013] in a group study with incentives to persuade find that arguments in favor of ambiguity neutral were somewhat more persuasive than arguments for ambiguity aversion and ambiguity seeking.…”

Section: Additional Related Literaturementioning

confidence: 99%

Is Ellsberg Behavior Evidence of Ambiguity Aversion?

2019

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We perform two types of lab experiments to assess the normative and positive appeal of preference models exhibiting ambiguity aversion. Our first experiment is a simple extension of the Ellsberg [1961] two-color urn experiment in which there is an option that hedges ambiguity away completely and that dominates the options that correspond to Ellsberg behavior. 63% of subjects choose the dominated Ellsberg options, which compares similarly to the proportion of subjects choosing the risky urn in the standard two-color experiment. While subjective expected utility cannot explain this choice, also none of the classical models of ambiguity aversion can explain this choice. Our second experiment is also based on the Ellsberg two-color urn experiment. In this experiment, in various treatments, we provide advice in the form of short video clips in favor of, as well as against, the Ellsberg choice. We find suggestive, but not conclusive, evidence that subjects' choices are influenced by advice and, in these cases, mostly in the direction of abandoning the Ellsberg option.

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Group Decisions Under Ambiguity: Convergence to Neutrality

Cited by 17 publications

References 47 publications

Are individuals more risk and ambiguity averse in a group environment or alone? Results from an experimental study

Are individuals more risk and ambiguity averse in a group environment or alone? Results from an experimental study

Hot hand and gambler's fallacy in teams: Evidence from investment experiments

Is Ellsberg Behavior Evidence of Ambiguity Aversion?

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