Risk Aversion, Overconfidence and Private Information as Determinants of Majority Thresholds

Abstract

We present and experimentally test a theoretical model of majority threshold determination as a function of voters' risk preferences. The experimental results confirm the theoretical prediction of a positive correlation between the voter's risk aversion and the corresponding preferred majority threshold. Furthermore, the experimental results show that a voter's preferred majority threshold negatively relates to the voter's confidence about how others will vote. Moreover, in a treatment in which individuals receive a private signal about others' voting behaviour, the confidence-related motivation of behaviour loses ground to the signal's strength. © 2014 Wiley Publishing Asia Pty Ltd.