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  • savings_theory_decision_rev1

    Rights statement: The final publication is available at Springer via https://doi.org/10.1007/s11238-019-09694-8

    Accepted author manuscript, 535 KB, PDF document

    Embargo ends: 5/03/20

    Available under license: CC BY-NC: Creative Commons Attribution-NonCommercial 4.0 International License

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Individual vs. Group Decision Making: an Experiment on Dynamic Choice under Risk and Ambiguity

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<mark>Journal publication date</mark>1/07/2019
<mark>Journal</mark>Theory and Decision
Volume87
Number of pages36
Pages (from-to)87–122
Publication statusPublished
Early online date5/03/19
Original languageEnglish

Abstract

This paper focuses on the comparison of individual and group decision making, in a stochastic inter-temporal problem in two decision environments, namely risk and ambiguity. Using a consumption/saving laboratory experiment, we investigate behaviour in four treatments: (1) individual choice under risk; (2) group choice under risk; (3) individual choice under ambiguity and (4) group choice under ambiguity. Comparing decisions within and between decision environments, we find an anti-symmetric pattern. While individuals are choosing on average closer to the theoretical optimal predictions, compared to groups in the risk treatments, groups tend to deviate less under ambiguity. Within decision
environments, individuals deviate more when they choose under ambiguity, while groups are better planners under ambiguity rather than under risk. Our results extend the often observed pattern of individuals (groups) behaving more optimally under risk (ambiguity), to its dynamic dimension.

Bibliographic note

The final publication is available at Springer via https://doi.org/10.1007/s11238-019-09694-8