Individual vs. group decision-making: an experiment on dynamic choice under risk and ambiguity

Abstract

This paper focuses on comparing individual and group decision making, in a stochastic inter-temporal problem in two decision environments, namely risk and ambiguity. Using a consumption/saving laboratory experiment, we investigate behaviour in four treatments: (1) individual choice under risk; (2) group choice under risk; (3) individual choice under ambiguity and (4) group choice under ambiguity. Comparing decisions within and between decision environments, we find an anti-symmetric pattern. While individuals are choosing on average closer to the theoretical optimal predictions, compared to groups in the risk treatments, groups tend to deviate less under ambiguity. Within decision environments, individuals deviate more when they choose under ambiguity, while groups are better planners under ambiguity rather than under risk. We argue that the results might be driven by differences in the levels of ambiguity and risk attitudes between individuals and groups, extending the frequently observed pattern of groups behaving closer to risk and ambiguity neutrality, to its dynamic dimension.

Intragenerational deliberation and intergenerational sustainability dilemma

“…Cason and Mui (1997) claim that intragroup face-to-face communication does not always lead groups to make rational and self-regarding decisions, following standard economic theory. However, some studies have found that group behaviors can be more self-regarding and rational than individual behaviors in the same settings (Dawes et al, 1977, Isaac and Walker, 1988, Bornstein and Ben-Yossef, 1994, Kugler et al, 2012, Charness and Sutter, 2012, Cooper and Kuhn, 2016, Meub and Proeger, 2017, Crawford and Harris, 2018, Carbone et al, 2019, Vollstadt and Bohm, 2019. This study shows that how intragenerational deliberation affects intergeneration behaviors shall be depending on socioeconomic contexts, cultures and norms in people's daily life (Henrich et al, 2005, 2010b, Fehr and Leibbrandt, 2011.…”

“…Group behaviors have been intensively studied to understand how communication influences people's behaviors through social interactions (Dawes et al, 1977, Isaac and Walker, 1988, Bornstein and Ben-Yossef, 1994, Kugler et al, 2012, Charness and Sutter, 2012, Cooper and Kuhn, 2016, Meub and Proeger, 2017, Crawford and Harris, 2018, Carbone et al, 2019, Vollstadt and Bohm, 2019. Intragroup communication makes groups more competitive and self-regarding in a socioeconomic context such as market competition, tournament and bargaining (Kugler et al, 2012, Charness andSutter, 2012).…”

On the current state of combining human and artificial intelligence for strategic organizational decision making

“…Bias can either be conscious, an active introduction of incorrect information by one decision group member at any stage of the process, or unconscious, due to the individual or group being unaware of subjectivity, which in some cases even increases with experience (Roth et al 2015;Cheng and Foley 2018). Although the process of decision theory refers to one rational individual, research on decisions under uncertainty has found that groups make decisions more in line with the theory than individuals do, and they also compensate for some of these challenges through discussion (Charness and Sutter 2012;Kugler et al 2012;Carbone et al 2019). As groups are also the focus of this study, the next section provides an overview of current research (for an overview, see Kugler et al 2012).…”

“…Companies exist as a result of and are shaped by decisions (Melnyk et al 2014;Pereira and Vilà 2016) that constitute and are constituted by their strategy (Mintzberg 1972). Strategic decision making is a dynamic and challenging process (Mintzberg 1973;Liu et al 2013;Dev et al 2016;Moreira and Tjahjono 2016) due to organizations operating in complex environments and because of the the direct or indirect effects that decisions can have on stakeholders (Koch et al 2009;Delen et al 2013;El Sawy et al 2017;Carbone et al 2019).…”

Future of Business Culture: An Artificial Intelligence‐Driven Digital Framework for Organization Decision‐Making Process

“…Firms are born and formed as a result of the serious consequence up and define their strategy. Strategy implementation is a continual and sophisticated process since companies invest in diverse systems, and decisions can have explicitly or implicitly consequences on participants [8]. Choices made in the presence of risk are distinguished from those made in the face of uncertainty, according to conventional causal inference.…”