2.3 KiB
| title | chunk | source | category | tags | date_saved | instance |
|---|---|---|---|---|---|---|
| Behavioral game theory | 6/6 | https://en.wikipedia.org/wiki/Behavioral_game_theory | reference | science, encyclopedia | 2026-05-05T15:10:04.395995+00:00 | kb-cron |
=== Group decisions === Behavioral game theory considers the effects of groups on rationality. In the real world many decisions are made by teams, yet traditional game theory uses an individual as a decision maker. Milton Friedman argues that usually people ignore individual behavior and focus more on group behavior, so group behavior is often perceived as more rational. This created a need to model group decision-making behavior. Bornstein and Yaniv (1998) examined the difference in rationality between groups and individuals in an ultimatum game. In this game player one (or group one) decides what percentage of a payout to give to player two (or group two) and then player two decides whether to accept or reject this offer. Participants in the group condition were put in groups of three and allowed to deliberate on their decisions. Perfect rationality in this game would be player one offering player two none of the payout, but that is almost never the case in observed offers. Bornstein and Yaniv found that groups were less generous, willing to give up a smaller portion of the payoff, in the player one condition and more accepting of low offers in the player two condition than individuals. These results suggest that groups are more rational than individuals. Kocher and Sutter (2005) used a beauty contest game to study and compare individual and group behavior. A beauty contest game is one where all participants choose a number between zero and one hundred. The winner is the participant who chooses a number closest to two thirds of the average number. In the first round the rational choice would be thirty-three, as it is two thirds of the average number, fifty. Given an infinite number of rounds all participants should choose zero according to game theory. Kocher and Sutter found that groups did not perform more rationally than individuals in the first round of the game. However, groups performed more rationally than individuals in subsequent rounds. This shows that groups are able to learn the game and adapt their strategy faster than individuals.
== See also == Behavioral economics Experimental economics Game theory
== References ==