Animals often increase their apparent willingness to incur risk when foraging in groups, presumably because group membership reduces an individual's risk of predation. As group size increases, however, competition for resources may also increase, resulting in a decrease in the quantity of resources available to each member of the group. When resources are scarce, individuals might be expected to increase their foraging effort in an attempt to increase their share. Such increases in effort will often appear to increase an individual's risk of predation. Thus, increased competition may contribute to the frequently observed relationship between risk-taking behaviour and group size. To date, no experimental assessment of the relative importance of these two mechanisms exists. We argue that to differentiate between the hypotheses of ‘risk reduction’ and ‘increased competition’, it is necessary to quantify the effect of predation risk on the form of the relationship between group size and risk-taking behaviour, and thus, to manipulate both group size and predation risk. We conducted an experiment to determine the relative importance of risk reduction and increased competition to the foraging decisions of juvenile coho salmon, Oncorhynchus kisutch. We recorded the foraging behaviour of 18 focal individuals in the presence and absence of a predator, and in the company of zero, one and three conspecifics. As group size increased from one to four, focal fish captured more prey items, ventured closer to the feeder (and predator) to intercept them, and decreased their use of cover. Furthermore, although focal individuals captured fewer prey items and intercepted them further from the feeder in the presence of the predator than in its absence, the form of the relationship between risk-taking behaviour and group size was not affected by the level of predation risk. The results of our experiment are consistent with the interpretation that increases in risk-taking behaviour with group size occurred primarily as a consequence of increased competition for scarce resources.