Barking up the right tree: Are small groups rational agents? |
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Authors: | James C Cox Stephen C Hayne |
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Institution: | (1) Department of Economics and Experimental Economics Center, Georgia State University, Atlanta, GA, 30302-3992;(2) Department of Computer Information Systems, Colorado State University, Fort Collins, CO, 80523 |
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Abstract: | Both mainstream economics and its critics have focused on models of individual rational agents even though most important
decisions are made by small groups. Little systematic work has been done to study the behavior of small groups as decision-making
agents in markets and other strategic games. This may limit the relevance of both economics and its critics to the objective
of developing an understanding of how most important decisions are made. In order to gain some insight into this issue, this
paper compares group and individual economic behavior. The objective of the research is to learn whether there are systematic
differences between decisions made by groups and individual agents in market environments characterized by risky outcomes.
A quantitative measure of deviation from minimally-rational decisions is used to compare group and individual behavior in
common value auctions.
JEL Classification D44, C91, C92 |
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Keywords: | Rationality Groups Auctions Experiments |
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