Group member characteristics and risk taking by consensus

• I measure the effect of group member characteristics on group risk taking.
• Women are more risk averse in individual choices.
• Risk aversion in groups is increasing in the number of female group members.
• Group decision simulations based on individual preferences predict poorly.

I investigate the effect of group members’ individual characteristics on risk taking by groups in an investment experiment. I find that gender is the only of the characteristics that significantly affects risk taking, both for individual investments and group investment decisions by consensus. In individual decisions, women are more risk averse than men. In groups, risk aversion is increasing in the number of female group members. I make out-of-sample predictions of group decisions for different gender compositions based on the sample of individual preferences using simulation of various ‘social decision schemes’. Generally, none of the schemes predicts group decisions well. These results pose new challenges for theories of preference aggregation in groups and have practical implications for organizations that rely on teams to make decisions under risk.