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TOPIC:
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GROUP-SHIFT AND THE CONSENSUS EFFECT
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ABSTRACT
Individuals often tend to conform to the choices of others in group decisions, compared to choices made in isolation, giving rise to phenomena such as group polarization and the bandwagon effect. We show that this behavior, which we term the consensus effect, is equivalent to a well-known violationof expected utility, namely strict quasi-convexity of preferences. In contrast to the equilibrium outcome when individuals are expected utility maximizers, quasi-convexity of preferences imply that group decisions may fail to properly aggregate preferences and strictly Pareto-dominated equilibria may arise. Moreover, these problems become more severe as the size of the group grows.
Keywords: Aggregation of Preferences, Choice Shifts in Groups, Consensus Effect, Non-Expected Utility, Quasi-Convex Preferences.
JEL Codes: D71, D81
Click here to view the paper.
Click here to view his CV.
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PRESENTER
David Dillenberger
University of Pennsylvania
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RESEARCH FIELDS
Microeconomics
Game Theory
Decision Theory
Behavioral Economics
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DATE:
8 Mar 2017 (Wednesday)
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TIME:
2pm - 3.30pm
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VENUE:
Meeting Room 5.1, Level 5
School of Economics
Singapore Management University
90 Stamford Road
Singapore 178903
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