HOW GROUPS REACH AGREEMENT IN RISKY CHOICES: AN EXPERIMENT

Authors

  • JINGJING ZHANG,

    1. Zhang: Assistant Professor, Institute for Empirical Research in Economics, University of Zurich, Blümlisalpstrasse 10, Zürich CH-8006, Switzerland. Phone +41-44-634-5562, Fax +41-44-634-4907, E-mail zhang148@gmail.com
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  • MARCO CASARI

    1. Casari: Associate Professor, Department of Economics, University of Bologna, Piazza Scaravilli 2, Bologna 40126, Italy. Phone +39-51-209-8662, Fax +39-51-209-8493, E-mail marco.casari@unibo.it
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    • This project was developed while both authors were at Purdue University, which provided an excellent research environment. We are grateful to Christine Jackson for her support and contribution of ideas. We thank Anya Savikhin for valuable research assistance, Tim Cason for comments on an earlier version of the paper as well as seminar participants at the IMEBE meeting in Alicante, Spain, CapuaLabSì meeting, Italy, ESA meeting in Lyon, France. Two anonymous referees made useful suggestions. J.Z. wishes to thank McMaster University for support during her post-doc when the paper was completed.


Abstract

This paper studies how groups resolve disagreement in lottery choices. In an experiment, subjects submit individual proposals, exchange chat messages, and must reach unanimity. Overall, group choices are more coherent and closer to risk neutrality than individuals'. The proposal of the minority prevails in about one instance out of five. About one third of the groups do not reach immediate agreement after communication. In these groups, extrovert subjects are more likely to lead the group outcome than confused or conscientious subjects. The amount, equality, and timing of chat messages help us to predict which choice prevails in the group. (JEL C92, D81)

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