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When do groups perform better than individuals? A company takeover experiment


Casari, Marco; Zhang, Jingjing; Jackson, Christine (2012). When do groups perform better than individuals? A company takeover experiment. Working paper series / Institute for Empirical Research in Economics 504, University of Zurich.

Abstract

It 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.

Abstract

It 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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8 citations in Microsoft Academic

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
Dewey Decimal Classification:330 Economics
JEL Classification:C91, C92, D03, D81
Uncontrolled Keywords:Winner’s curse, takeover game, group decision making, communication, experiments
Language:English
Date:April 2012
Deposited On:09 May 2012 14:42
Last Modified:16 Feb 2018 23:28
Series Name:Working paper series / Institute for Empirical Research in Economics
Number of Pages:33
ISSN:1424-0459
Additional Information:Revised version
OA Status:Green
Official URL:http://www.iew.unizh.ch/wp/iewwp504.pdf
Related URLs:http://www.econ.uzh.ch/wp.html

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