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Too Much Trust in Group Decisions: Uncovering Hidden Profiles by Groups and Markets

Author

Listed:
  • Boris Maciejovsky

    (School of Business, University of California, Riverside, Riverside, California 92521)

  • David V. Budescu

    (Department of Psychology, Fordham University, Bronx, New York 10458)

Abstract

A crucial challenge for organizations is to pool and aggregate information effectively. Traditionally, organizations have relied on committees and teams, but recently many organizations have explored the use of information markets. In this paper, the authors compared groups and markets in their ability to pool and aggregate information in a hidden-profiles task. In Study 1, groups outperformed markets when there were no conflicts of interest among participants, whereas markets outperformed groups when conflicts of interest were present. Also, participants had more trust in groups to uncover hidden profiles than in markets. Study 2 generalized these findings to a simple prediction task, confirming that people had more trust in groups than in markets. These results were not qualified by conflicts of interest. Drawing on experienced forecasters from Good Judgment Open, Study 3 found that familiarity and experience with markets increased the endorsement and use of markets relative to traditional committees.

Suggested Citation

  • Boris Maciejovsky & David V. Budescu, 2020. "Too Much Trust in Group Decisions: Uncovering Hidden Profiles by Groups and Markets," Organization Science, INFORMS, vol. 31(6), pages 1497-1514, November.
  • Handle: RePEc:inm:ororsc:v:31:y:2020:i:6:p:1497-1514
    DOI: 10.1287/orsc.2020.1363
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