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

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.group decision making, interactive decision making, rationality, discontinuity effect

Using narratives and numbers in performance prediction:Attitudes, confidence and validity

In a preregistered prediction-task experiment, we investigated the effect of narrative versus quantified information on decision-maker perceptions, confidence, predictor weighting, and predictive accuracy when making performance predictions. We also investigated the effect of who quantifies information (the decision maker or someone else). As expected, we found higher perceived informativeness and use intentions for narrative than quantified information. Information presented narratively was also weighted somewhat more heavily than quantified information. Using quantitative information quantified by decision makers themselves yielded higher perceived autonomy and use intentions than quantitative information quantified by someone else. However, no differences in prediction confidence were found and self- and other-produced quantifications received identical weight. Moreover, unexpectedly, differences in weighting did not translate to differences in predictive accuracy

Regret Salience and Accountability in the Decoy Effect

National Science Foundatio

Regret salience and accountability in the decoy effect

Two experiments examined the impact on the decoy effect of making salient the possibility of post-decision regret, a manipulation that has been shown in several earlier studies to stimulate critical examination and improvement of decision process. Experiment 1 (N = 62) showed that making regret salient eliminated the decoy effect in a personal preference task. Experiment 2 (N = 242) replicated this finding for a different personal preference task and for a prediction task. It also replicated previous findings that external accountability demands do not reduce, and may exacerbate, the decoy effect. We interpret both effects in terms of decision justification, with different justification standards operating for different audiences. The decoy effect, in this account, turns on accepting a weak justification, which may be seen as adequate for an external audience or one’s own inattentive self but inadequate under the more critical review triggered by making regret possibilities salient. Seeking justification to others (responding to accountability demands) thus maintains or exacerbates the decoy effect; seeking justification to oneself (responding to regret salience) reduces or eliminates it. The proposed mechanism provides a theoretical account both of the decoy effect itself and of how regret priming provides an effective debiasing procedure for it

Does overconfidence pay off when things go well?: CEO overconfidence, firm performance, and the business cycle

We investigate the moderating effect of the business cycle on the positive relationship between CEO overconfidence and firm performance. We propose that the expansion years of the business cycle enhance the positive impact of overconfident CEOs on firms’ performance. However, this effect is reduced during recession periods. We analyze the effect of CEO overconfidence on the Return on Equity of publicly listed US firms from 1992 to 2015, a period that includes the bursting of the dot-com bubble in 2001 and the Great Recession of 2008–2009. The empirical findings support the hypotheses that expansion periods increase the positive relationship between overconfident CEOs and firms’ performance, but this positive effect weakens during recessions.Fil: Reyes, Tomas. Pontificia Universidad Católica de Chile; ChileFil: Vassolo, Roberto Santiago. Universidad Austral. Instituto de Altos Estudios; Argentina. Pontificia Universidad Católica de Chile; Chile. Consejo Nacional de Investigaciones Científicas y Técnicas; ArgentinaFil: Kausel, Edgar E.. Pontificia Universidad Católica de Chile; ChileFil: Peña Torres, Diamela. Pontificia Universidad Católica de Chile; ChileFil: Zhang, Stephen. University of Adelaide; Australi