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Decisions from experience: How groups and individuals adapt to change

journal contribution
posted on 01.11.2014, 00:00 by Tomas Lejarraga, Jose Lejarraga, Cleotilde GonzalezCleotilde Gonzalez

Whether groups make better judgments and decisions than individuals has been studied extensively, but most of this research has focused on static tasks. How do groups and individuals compare in settings where the decision environment changes unexpectedly and without notification? This article examines group and individual behavior in decisions from experience where the underlying probabilities change after some trials. Consistent with the previous literature, the results showed that groups performed better than the average individual while the decision task was stable. However, group performance was no longer superior after a change in the decision environment. Group performance was closer to the benchmark of Bayesian updating, which assumed perfect memory. Findings suggest that groups did not adopt decision routines that might have delayed their adaption to change in the environment. Rather, they seem to have coordinated their responses, which led them to behave as if they had better memory and subsequently delayed adaptation.