A decision maker in an economics textbook is usually modeled as an individual
whose decisions are not inflfl uenced by any other people, but of
course, human decision-making in the real world is typically embedded
in a social environment. Households and fifi rms, common decision-making agents
in economic theory, are typically not individuals either, but groups of people—in the
case of fifi rms, often interacting and overlapping groups. Similarly, important political
or military decisions as well as resolutions on monetary and economic policy are
often made by confifi gurations of groups and committees rather than by individuals.
Economic research has developed an interest regarding group decision-making—
and its possible differences with individual decision-making—only rather recently.
Camerer (2003) concludes his book on Behavioral Game Theory with a section on the
top ten open research questions for future research, listing as number eight “how
do teams, groups, and fifi rms play games?” Potential differences between individual
and group decision-making have been studied over the past ten to 15 years in a large
set of games in the experimental economics literature.
In this paper, we describe what economists have learned about differences
between group and individual decision-making. This literature is still young, and in
this paper, we will mostly draw on experimental work (mainly in the laboratory) that
has compared individual decision-making to group decision-making, and to individual