Is There a Difference Between Individual and Group Risk-Taking? A Systematic Literature Review of Experimental Research

This paper provides a systematic literature review of experimental findings on the difference between individual risk-taking and risk-taking in groups from an economic perspective. Incorporating studies across different disciplines, the currently fragmented literature is synthesized in a replicable approach. Characteristics of the experimental designs and group decision-making are considered to derive factors influencing the reported results. Analyzing tendencies over a large body of research, I find that group risk-taking can be considered less extreme compared to individual risk-taking. However, the difference between individual and group risk-taking depends on a variety of characteristics of the experimental designs (e.g., winning probability) and group decision-making (e.g., communication among group members and observability of former decision outcomes) and the interplay between characteristics. For instance, the difference observed under distinct decision rules depends on the type of task as well as communication. Moreover, in contrast to exclusively focusing on risk-taking in general, additionally considering the inclination of risk-taking in relation to risk neutrality provides a clearer picture, as for example group risk-taking is (tends to be) closer to risk neutrality than individual risk-taking under computer-mediated (face-to-face) communication and when the outcomes of former decision outcomes can be observed. Future research should pursue a systematic approach by investigating various configurations of experimental design characteristics keeping the remaining characteristics constant to unify the mixed results of the current research, for instance by uniformly employing one default rule to test for the effect of the type of communication under unanimity-voting. Furthermore, the group dynamics caused by the dominance of certain group members in groups of different sizes are still to be addressed. Additionally, a clear test which cognitive mechanisms drive the differences between individual and group risk-taking from an economic perspective is still pending, calling for a stronger focus on the processes during group decision-making