Groups vs. Individuals in Decision Making: Literature Review and Gift Exchange Experiment

Groups make decisions more rational than individuals do. This may depend by several factors. The learning effect of the gaming mechanism has an important role, but above all knowledge of other groups member's preferences. In literature however, results are mixed. I present two experiments in order to test the learning effect in group decision-making. The first one where the learning effect is limited and a second one where the learning effect is bolstered. I find that learning effect is a mechanism that may explain differences in results. Knowledge of part of member’s preferences can have a role in the decision-making process because when there is no learning effect the results are far away from those hypothesized by economic theory. While if the mechanism is expanded, results are similar to the control treatment.