Estimating individual and group preference functionals using experimental data
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In this paper, the empirical performance of several preference functionals is assessed using individual and group experimental data. We investigate if there is a risky choice theory that fits group decisions better than alternative theories, and if there are significant differences between individual and group choices. Experimental findings reported in this paper provide answers to both of those questions showing that expected utility gains a “winning” position over higher-level functionals (we considered disappoint aversion and two variants of rank-dependent utility) when risky choices are undertaken by individuals as well as by small groups. However, in the group experiment, alternatives (and, most notably, disappoint aversion) improve their relative performance, a fact that hints at the existence of differences between individual and group choices. We interpreted this result as evidence that feelings-like disappointment aversion become stronger in group decision.
KeywordsGroup decision Expected utility Risk and uncertainty
JEL ClassificationC91 C92 D81 D70
The authors wish to thank the editor and three anonymous referee, who provided very useful comments on an earlier version of this paper. The experiment was conducted at the ESSE laboratory at the University of Bari, and was financed by the same University. This paper was written up while Piergiuseppe Morone was visiting the University of Castellón, for whose hospitality he is grateful.
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