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Risk Aversion, the Disposition Effect, and Group Decision Making: An Experimental Analysis
Author(s) -
Prates Wlademir R.,
Costa Newton C.A.,
Dorow Anderson
Publication year - 2017
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2843
Subject(s) - disposition , psychology , disposition effect , social psychology , risk aversion (psychology) , economics , econometrics , actuarial science , expected utility hypothesis , mathematical economics , biology , paleontology , context (archaeology)
This article reports a laboratory experiment comparing the behavior of individuals and groups in terms of their susceptibility to the disposition effect. A total of 174 students took part in six experimental sessions in which they made decisions individually, in pairs, or in three‐person groups. It was observed that the disposition effect was attenuated when the decisions were made in groups of two or three members. It was also noted that the attenuating effect of group decision making was the result of a reduction in the proportion of gains realized, indicating that the groups were less risk averse than individuals. Copyright © 2017 John Wiley & Sons, Ltd.