Using non-parametric revealed preference tests, we examine whether group decisions under risk are more consistent with utility maximization than individual decisions. Our findings show that group decisions exhibit significantly higher rationality as measured by indices of consistency with utility maximization (GARP), first-order stochastic dominance (FOSD), and expected utility theory (EUT).
- Speaker
- Date
- Thursday 13 Mar 2025, 12:00 - 13:00
- Type
- Seminar
- Room
- Kitchen/Lounge E1
- Building
- E Building
Specifically, groups outperform individuals in rationality by 0.036 points on the GARP index—a difference comparable to the gap between highly and lowly educated individuals observed in prior studies. Furthermore, we demonstrate that the more consistent group member disproportionately influences the group's decisions, highlighting a "teacher-pupil dynamic." Analyzing individual behavior after groups dissolve, we find that groups improve individual rationality but not uniformly across members. These results suggest that group deliberation processes can mitigate inconsistencies in decision-making, with implications for organizational, policy, and financial decision making.
Registration
To participate, please send an email to: ae-secr@ese.eur.nl
