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

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  • Tamar Kugler
  • Edgar E. Kausel
  • Martin G. Kocher

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.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3701.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3701

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

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