Decision process and preferences over risk under the “endogenous decision rule”: Results from a group experiment

The recent literature on individual vs. group decision-making, in risky contexts, has brought about divergent results, mainly depending on the institutional rules through which groups take decisions. While some studies where group decisions relied on the majority rule showed no appreciable difference between individuals and groups’ preferences, others where unanimity among group members was required found collective decisions to be less risk averse than individual ones. We elicited groups’ preferences over risk using what we defined “endogenous decision rule”, i.e. leaving groups free to endogenously solve the potential disagreement among their members, just as in many real life situations. Our results unambiguously show that individuals are more risk seeker than groups when facing gambles with positive expected payoff difference and more risk averse in the opposite case.