COLLECTIVE RISK-DECISIONS IN THE PRESENCE OF MANY RISKS

This paper reports the results of laboratory investigations of individual and group decision making regarding willingness to pay to reduce risks when more than one risk is present. It is found that group decision making environments improve the overall decisions when the consequence of the decision is common to all members of the group. When the consequences are individual, group decisions are less likely to improve upon individual decisions. The latter effect appears to be due to the unwillingness of individuals to engage in communication when they are not bound by a group decision. The conclusion is that both discussion and common outcomes are necessary for group decisions to be superior to individual decisions.