Risk-averse and self-interested shifts in groups in both median and random rules

• Published in: IDEAS Working Paper Series from RePEc
• Main Authors: Kamijo, Yoshio, Tamura, Teruyuki
• Format: Paper
• Language: English
• Published: St. Louis Federal Reserve Bank of St. Louis 01.01.2019
• Subjects: Decision making

This study examines whether attitudes toward risk and altruism are affected by being in a group or being alone. Differing from previous economic studies of group decision-making, we attempt to exclude the effects of group informal discussion, which are thought to be a black box when individuals make decisions in a group. Subjects in our experiment were requested only to show their faces to other members without any further communication. Moreover, we adopted two collective decision rules—namely, the median rule and the random rule—which provide the truth-telling mechanism. In experiments of both anonymous investments and donations, we found that subjects who made decisions in a group offered significantly lower amounts than individuals who made decisions alone, even controlling for individuals' risk and altruistic preferences. Our results indicate that people are more risk averse and self-interested when they are in a group regardless of which collective decision rules are adopted.