Individual and group behaviour in the traveler's dilemma: An experimental study

• We run an experiment to test the traveler's dilemma using individual and group data.
• The size of the penalty/reward did not affect subjects’ choices in the first-period.
• The size of the penalty/reward affects subjects’ behaviour in the repeated game.
• Groups behave more rationally: they were always closer to the Nash equilibrium.
• The reference point did not encourage coordination around the Pareto optimal choice.

We provide an experimental test of the traveler's dilemma using individual and group data. Our investigation aims to assess whether individual decisions differ significantly from group decisions. Experimental findings reported in this paper show that: (1) groups are always more rational – i.e. their claims are closer to the Nash equilibrium; (2) the size of the penalty/reward influences convergence to the equilibrium both when decisions are taken individually or in groups; and (3) groups are more sensitive to the size of the penalty/reward.