Eliciting Preferences Over Risk: An Experiment

Previous research has begun to investigate how small groups make decisions when facing risky choices. However, no consensus has been reached. One stream of research found that groups are more risk averse, while another one reported the contrary and some studies did not even find any significant difference. This paper is meant to provide a clear comparison between two different experimental designs from Harrison et al. (2012) and Zhang and Casari, (2012). The former tests the risk preferences of groups of three members where group’s decision is taken with the majority rule; the latter, also tests risk preferences of three-members group, but using a different lottery set and aggregation rule, i.e. unanimity. These two experiments lead to different results: Harrison et al. (2012) did not find any substantial difference between individuals’ and groups’ preferences over risk, while Zhang and Casari (2012) found that groups tend to be more prone to the risk neutrality than individuals. Additionally, we present a replication study of Harrison et al. (2012) and Zhang and Casari (2012) in order to check to what extent the lottery set and the aggregation rule (majority or unanimity) adopted to elicit preferences may affect the final group choice. It results that individual and group choices are not significantly different, regardless of the lottery set and the aggregation rule used in the experimental design.