Preferences over social risk

Harrison, Glenn W.; Lau, Morten I.; Rutström, E. Elisabet; Tarazona-Gómez, Marcela

doi:10.1093/oep/gps021

Cited by 67 publications

(18 citation statements)

References 30 publications

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“… conduct a similar study with groups, but they report that the groups choose the safe lottery more frequently than the individual group members. also conducted group experiments with the H&L procedure. Rather than the group reaching a decision, each member indicated one's own preference for the decision of the group with the majority opinion being implemented.…”

Section: Background Literaturementioning

confidence: 99%

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

Deck¹,

Lee²,

Reyes³

et al. 2012

Southern Economic Journal

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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 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.

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Section: Background Literaturementioning

confidence: 99%

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

Deck¹,

Lee²,

Reyes³

et al. 2012

Southern Economic Journal

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“…This section focuses on four recent papers that examine decisions made by groups facing risky choices, Baker et al (2008), Harrison et al (2010), Masclet et al (2009), and Shupp and Williams (2008). Table 1 presents a design comparison with the present study.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In all studies in Table 1, the instructions call for a unanimous group decision except in Harrison et al (2010) that employed a majority voting rule. Within the consensus call, there are substantive differences in the default choice when a group does not reach unanimity.…”

Section: Literature Reviewmentioning

confidence: 99%

How Groups Reach Agreement in Risky Choices: An Experiment

Zhang

Casari

2011

Economic Inquiry

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Abstract:This paper studies how groups resolve disagreement when they must reach unanimity after submitting individual proposals and exchanging text-form messages via a chat window in lottery choice experiments. We find that the majority proposal does not always prevail. The minority proposal prevails sometimes, especially when it is closer to risk neutrality. About one third of the groups disagrees after communication and would have got zero payoffs if disagreement remains after two more attempts without communication. In these groups, extrovert subjects are more likely to lead the group outcome than confused or conscientious subjects. Overall group choices are more coherent and closer to risk neutrality than individuals'. Checking the recorded messages, we find that the chat activity is intense, growing with the level of disagreement and aims at finding consensus. The amount and timing of chat messages help us to predict which choice prevails in the group. JEL Classifications: C92, D81

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“…Experimental research indicates that the majority of individuals are risk averse (Binswanger, 1980; Holt and Laury, 2002; Harrison et al, 2012). However, prior studies disagree about whether individuals become more likely to accept a given gamble if their wealth experiences a shock.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Wealth Shocks on Loss Aversion: Behavior and Neural Correlates

et al. 2017

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Kahneman and Tversky (1979) first demonstrated that when individuals decide whether or not to accept a gamble, potential losses receive more weight than possible gains in the decision. This phenomenon is referred to as loss aversion. We investigated how loss aversion in risky financial decisions is influenced by sudden changes to wealth, employing both behavioral and neurobiological measures. We implemented an fMRI experimental paradigm, based on that employed by Tom et al. (2007). There are two treatments, called RANDOM and CONTINGENT. In RANDOM, the baseline setting, the changes to wealth, referred to as wealth shocks in economics, are independent of the actual choices participants make. Under CONTINGENT, we induce the belief that the changes in income are a consequence of subjects' own decisions. The magnitudes and sequence of the shocks to wealth are identical between the CONTINGENT and RANDOM treatments. We investigated whether more loss aversion existed in one treatment than another. The behavioral results showed significantly greater loss aversion in CONTINGENT compared to RANDOM after a negative wealth shock. No differences were observed in the response to positive shocks. The fMRI results revealed a neural loss aversion network, comprising the bilateral striatum, amygdala and dorsal anterior cingulate cortex that was common to the CONTINGENT and RANDOM tasks. However, the ventral prefrontal cortex, primary somatosensory cortex and superior occipital cortex, showed greater activation in response to a negative change in wealth due to individual's own decisions than when the change was exogenous. These results indicate that striatum activation correlates with loss aversion independently of the source of the shock, and that the ventral prefrontal cortex (vPFC) codes the experimental manipulation of agency in one's actions influencing loss aversion.

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Preferences over social risk

Cited by 67 publications

References 30 publications

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

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

How Groups Reach Agreement in Risky Choices: An Experiment

The Effect of Wealth Shocks on Loss Aversion: Behavior and Neural Correlates

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