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. Standard game theory assumes that individuals are rational, self-interested decision makers-that is, decision makers are selfish, perfect calculators, and flawless executors of their strategies. A myriad of studies shows that these assumptions are problematic, at least when examining decisions made by individuals. In this article, we review the literature of the last 25 years on decision making by groups. 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 group decisions are closer to the game-theoretic assumption of rationality than individual decisions. Given that many real-world decisions are made by groups, it is possible to argue that standard game theory is a better descriptive model than previously believed by experimental researchers. We conclude by discussing future research avenues in this area.
|Original language||English (US)|
|Number of pages||12|
|Journal||Wiley Interdisciplinary Reviews: Cognitive Science|
|State||Published - Jul 2012|
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