Same Process, Different Outcomes: Group Performance in an Acquiring a Company Experiment
42 Pages Posted: 11 Jan 2016
It is still an open question when groups perform better than individuals in intellective tasks. We report that in an Acquiring a Company game, what prevailed when there was disagreement among group members was the median proposal and not the best proposal. This aggregation rule explains why groups underperformed with respect to a "truth wins" benchmark and why they performed better than individuals deciding in isolation in a simple version of the task but worse in the more difficult version. Implications are drawn on when to employ groups rather than individuals in decision making.
Keywords: winner's curse, group decision making, communication, risky shift, herd behavior
JEL Classification: C91, C92, D03, D81
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