When do groups perform better than individuals? A company takeover experiment
AbstractIt is still an open question when groups perform better than individuals in intellectual tasks. We report that in a company takeover experiment, groups placed better bids than individuals and substantially reduced the winner’s curse. This improvement was mostly due to peer pressure over the minority opinion and to learning. Learning took place from interacting and negotiating consensus with others, not simply from observing their bids. When there was disagreement, what prevailed was not the best proposal but the one of the majority. Groups underperformed with respect to a “truth wins” benchmark although they outperformed individuals deciding in isolation.
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Bibliographic InfoPaper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 504.
Date of creation: Sep 2010
Date of revision: Apr 2012
Winner’s curse; takeover game; group decision making; communication; experiments;
Other versions of this item:
- M. Casari & J. Zhang & C. Jackson, 2011. "When Do Groups Perform Better than Individuals? A Company Takeover Experiment," Working Papers wp763, Dipartimento Scienze Economiche, Universita' di Bologna.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-25 (All new papers)
- NEP-CBE-2010-09-25 (Cognitive & Behavioural Economics)
- NEP-CDM-2010-09-25 (Collective Decision-Making)
- NEP-EXP-2010-09-25 (Experimental Economics)
- NEP-HPE-2010-09-25 (History & Philosophy of Economics)
- NEP-MIC-2010-09-25 (Microeconomics)
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