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Collective Choices Under Ambiguity

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Abstract

We investigate experimentally whether collective choice environments matter for individual attitudes to ambiguity. In a simple two-urn Ellsberg experiment, one urn offers a 45 % chance of winning a fixed monetary prize while the other offers an ambiguous chance. Participants choose either individually or in groups of three. Group decision rules vary in the level of individual responsibility for the others’ payoffs: the collective choice is taken by majority, randomly delegated to two group members, or randomly delegated to a single group member. Although most participants display consistent ambiguity attitudes across their decisions, taking responsibility for the others tends to foster ambiguity aversion.

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Notes

  1. See also Camerer and Weber (1992) for a comprehensive review of early empirical and theoretical work on ambiguity.

  2. It has also been shown that AA is affected by the comparison with more familiar events or more knowledgeable individuals (e.g., Fox and Tversky 1995; Chow and Sarin 2002; Fox and Weber 2002).

  3. Experiments in which a person decided for one or more others with no consequence to himself have also been carried out. Findings are again not unanimous. Indeed, while Reynolds et al. (2009) and Eriksen and Kvaløy (2010) found individuals to be more risk averse when deciding for others than when deciding for themselves, Chakravarty et al. (2011) detected increased risk taking in decisions for others.

  4. An alternative would have been to ask subjects to evaluate a given ambiguous prospect against a list of risky prospects, with varying expected values. This multiple price list (MPL) procedure would have enabled us to quantify ambiguity attitudes, but it unnecessarily complicates the design of the conditions with shared responsibility. Additionally, as remarked by Andersen et al. (2006), a MPL allows for multiple switching points, thus leading to potentially inconsistent decisions, and may be susceptible to framing effects.

  5. The standard experimental economics practice of randomly selecting one of the three binary choices to determine the final outcome is not a feasible option when responsibility for the group payoffs must be shared between two group members.

  6. The sequence makes no difference in case of transitive preferences and sincere voting. If subjects—despite the lack of preference information in our communication-free design—seek to be strategic, there is scope for misrepresentation of preferences in D2 and MV. This scope exists for any collective decision rule—sequential or not—if it is non-authoritarian and permits each bet to be selected (cf. the Gibbard–Satterthwaite theorem). Manipulation would, however, require very specific subjective beliefs and then affect only one’s choice of \(U_B\) versus \(U_W\).

  7. Note that if a participant wants to bet on, e.g., \(U_W\), so that the choice between \(U_B\) and \(K_Y\) becomes payoff irrelevant, this does not undermine the identification of the participant’s preference type because the two choice patterns selecting \(U_W\) as the relevant bet (namely \(U_W \succsim K_Y \succsim U_B\) and \(U_W \succsim U_B \succsim K_Y\)) are both classified as SEU.

  8. We refer readers to Braham and van Hees (2012) for a philosophical discussion of degrees of responsibility and the thorny issue of how individuals can be held responsible for a collective outcome for which their individual choices played no pivotal role.

  9. A translated version of the instructions can be found in the supplement.

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Acknowledgments

We thank the editor and two anonymous referees for careful review and valuable comments. We are very grateful to Werner Güth for useful discussion and suggestions. We also benefited from the comments of participants at the 2013 Florence Workshop on Behavioral and Experimental Economics. Albrecht Noll and Claudia Zellmann provided valuable assistance in conducting the experiment. The authors bear full responsibility for any errors and omissions.

Funding This study was funded by the Max Planck Institute of Economics, Jena (Germany).

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Authors and Affiliations

  1. Department of Economics, University of Verona, via Cantarane 24, 37129, Verona, Italy

    M. Vittoria Levati & Ivan Soraperra

  2. University of Bayreuth, Universitätsstrasse 30, 95447, Bayreuth, Germany

    Stefan Napel

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  1. M. Vittoria Levati
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  2. Stefan Napel
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  3. Ivan Soraperra
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Correspondence to Stefan Napel.

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The authors declare that they have no conflict of interest. They further confirm that they read and approved the manuscript and that there are no other persons who satisfied the criteria for authorship but are not listed.

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Levati, M.V., Napel, S. & Soraperra, I. Collective Choices Under Ambiguity. Group Decis Negot 26, 133–149 (2017). https://doi.org/10.1007/s10726-016-9488-4

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