Same process, different outcomes: group performance in an acquiring a company experiment

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I EIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. 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. JEL Classification:C91, C92, D03, D81

The Dollar Auction Game: A Laboratory Comparison Between Individuals and Groups

“…Moreover, the difficulty level 4 of the task is changed to provide insights on when groups outperform individuals. Casari et al (2015) show that results are crucially task dependent. While in the simple task groups perform better than individuals, since they reduce the winner's curse and place better bids than stand-alone individuals, in the difficult task individuals decisions are superior relative to those made by groups.…”

“…Sutter et al (2009) relate their achievement to a different approach of groups and individuals toward competition, arguing that competition among groups is more ruthless than competition among individuals. In a recent contribution, Casari et al (2015) compare three-member groups and individuals' performance in an "Acquiring a Company" task. In order to track the main forces leading the different choices of groups and individuals, the team decision making process is split up into three steps: first, each subject presents an individual proposal;…”

Endogenous Role Assignment and Team Performance

“…In Casari et al. (), groups consist of three members who are all in the role of buyers (while sellers were computerized). Their paper does not focus on role assignment and how it affects team performance.…”

“…Evidence from economic experiments studying play of games includes Cooper and Kagel (, , ), Charness et al (), and Casari et al. (). For surveys, see Charness and Sutter () and Kugler et al.…”

Common Value Auctions with Voluntary and Qualified Entry

“…The low-stake activity was a company takeover game where there was a buyer and a seller who moved sequentially (e.g., Samuelson [1984]; Casari, Zhang and Jackson [2016]). For this activity there is no competition with other subjects and no strategic risk.…”