Risk Taking Behavior: An Experimental Analysis of Individuals and Pairs∗

The decision to undertake risk is often made in groups, while much of the economics literature on risk taking focuses on the individual. We report the results of controlled laboratory experiments that compare behavior between individuals and pairs. Using the Holt and Laury (2002) procedure and a within–subject design, we find no evidence of group polarization, but do find significant ordering effects. Pair choices are consistent with a bargaining framework where gender and age impact relative bargaining weights but there is little evidence that conversational leadership or personality does. Finally, the results indicate that pair decisions and partner personality characteristics influence subsequent individual choices. JEL classification codes: C7, C9, D7, D8.