Risk taking and information aggregation in groups

Bougheas, Spiros; Nieboer, Jeroen; Sefton, Martin

Abstract

We report a controlled laboratory experiment examining risk-taking and information aggregation in groups facing a common risk. The experiment allows us to examine how subjects respond to new information, in the form of both privately observed signals and signals reported from others. We find that a considerable number of subjects exhibit ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also find a striking degree of consensus when subjects make decisions on behalf of the group under a random dictatorship procedure. Reverse confirmation bias and the incidence of consensus are considerably reduced when group members can share signals but not communicate.

Citation

Bougheas, S., Nieboer, J., & Sefton, M. (2015). Risk taking and information aggregation in groups. Journal of Economic Psychology, 51, https://doi.org/10.1016/j.joep.2015.08.001

• Journal Article Type: Article
• Acceptance Date: Aug 5, 2015
• Publication Date: Aug 8, 2015
• Deposit Date: Sep 7, 2015
• Publicly Available Date: Sep 8, 2015
• Journal: Journal of Economic Psychology
• Print ISSN: 0167-4870
• Electronic ISSN: 0167-4870
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 51
• DOI: https://doi.org/10.1016/j.joep.2015.08.001
• Keywords: Group Behavior, Teams, Decision Making, Risk, Experiment
• Public URL: https://nottingham-repository.worktribe.com/output/759293
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S0167487015000999
• Contract Date: Sep 7, 2015