Citation

Charness G, Karni E, Levin D. J. Risk Uncertain. 2007; 35(2): 129-148.

Affiliation

Johns Hopkins Univ, Dept Econ, Baltimore, MD 21218 USA; Univ Calif at Santa Barbara, Dept Econ, Santa Barbara, CA 93106 USA; Ohio State Univ, Dept Econ, Columbus, OH 43210 USA

Copyright

(Copyright © 2007, Holtzbrinck Springer Nature Publishing Group)

DOI

10.1007/s11166-007-9020-y

PMID

unavailable

Abstract

This paper reports the results of experiments designed to test whether individuals and groups abide by monotonicity with respect to first-order stochastic dominance and Bayesian updating when making decisions under risk. The results indicate a significant number of violations of both principles. The violation rate when groups make decisions is substantially lower, and decreasing with group size, suggesting that social interaction improves the decision-making process. Greater transparency of the decision task reduces the violation rate, suggesting that these violations are due to judgment errors rather than the preference structure. In one treatment, however, less complex decisions result in a higher error rates.

Language: en