Are Groups More Rational than Individuals? A Review of Interactive Decision Making in Groups

33 Pages Posted: 25 Jan 2012

See all articles by Tamar Kugler

Tamar Kugler

University of Arizona - Eller College of Management

Edgar E. Kausel

University of Chile - Faculty of Economics and Business

Martin G. Kocher

Ludwig Maximilian University of Munich - Faculty of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Göteborg University - School of Business, Economics and Law; Queensland University of Technology - School of Economics and Finance

Date Written: January 23, 2012

Abstract

Many decisions are interactive; the outcome of one party depends not only on its decisions or on acts of nature but also on the decisions of others. In the present article, we review the literature on decision making made by groups of the past 25 years. Researchers have compared the strategic behavior of groups and individuals in many games: prisoner’s dilemma, dictator, ultimatum, trust, centipede and principal-agent games, among others. Our review suggests that results are quite consistent in revealing that groups behave closer to the game-theoretical assumption of rationality and selfishness than individuals. We conclude by discussing future research avenues in this area.

Keywords: group decision making, interactive decision making, rationality, discontinuity effect

JEL Classification: C91, C92

Suggested Citation

Kugler, Tamar and Kausel, Edgar E. and Kocher, Martin G., Are Groups More Rational than Individuals? A Review of Interactive Decision Making in Groups (January 23, 2012). CESifo Working Paper No. 3701. Available at SSRN: https://ssrn.com/abstract=1990201

Tamar Kugler

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

Edgar E. Kausel

University of Chile - Faculty of Economics and Business ( email )

Universidad de Chile
Diagonal Paraguay 257
Santiago
Chile
(56 2) 978 3790 (Phone)

Martin G. Kocher (Contact Author)

Ludwig Maximilian University of Munich - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

Stumpergasse 56
A-1060 Vienna, A-1060
Austria

Göteborg University - School of Business, Economics and Law ( email )

Vasagatan 1
Goteborg, 40530
Sweden

Queensland University of Technology - School of Economics and Finance ( email )

GPO Box 2434
2 George Street
Brisbane, Queensland 4001
Australia

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