Good decision making in groups: is coordination a problem?
Short link to this synthesis: http://bit.ly/2yX6jxZ
Nobuyuki Hanaki, Nicolas Jacquemet, Stéphane Luchini, Adam Zylbersztejn
The coordination of individual decisions made by people within groups (firms, teams, markets, etc.) is often a key element in success: in many situations, the central question facing organisations is less knowing what solution to adopt than ensuring that members of the organisation make decisions that are coherent with each other. This question has long been studied in economics with the help of the tools of game theory, which stresses the role of strategic uncertainty in coordination problems: the difficulty a group has co-ordinating itself to make the best decision for all is strongly linked to difficulties that group members have in correctly anticipating the decisions of the others. An earlier study by Jacquemet, Luchini and Zylbersztejn (1) shows that certain forms of communication improve co-ordination but do not succeed in eliminating all coordination failures.
In a series of articles, Nobuyuki Hanaki, together with these three authors, uses social science lab experiments to understand the persistence of coordination failures even in situations where effective communication tools are available. A first study compares decisions made in a coordination game with those that we see in a game that is identical except that the participants in the experiment are informed that they are interacting with computers whose decisions are perfectly known in advance. These participants thus do not face any strategic uncertainty, which creates a behavioural reference for evaluating the effect of strategic uncertainty on coordination failures. The results show that coordination failures remain significant even in the absence of strategic uncertainty (2), which thus only partially explains them: another part is explained simply by inappropriate decisions. Therefore, it is the decision making itself, and not the coordination of individual decisions, that must be the subject of attention aimed at improving decisions made within groups.
A second study went further, inspired by work in psychology and management, which reveals the role of cognitive capacities in decision making within organisations. This study uses cognitive tests borrowed from psychology, based on, for example, puzzle solving and logical enigmas (used increasingly often by human resources departments in recruitment tests). The results show that in the absence of strategic uncertainty, people whose decisions lead to coordination failures are indeed more likely to obtain weak results in cognitive testing. But the most important finding is that individual cognitive capacities explain only a small fraction of total coordination failures. Cognitive faculty is certainly a factor in a group’s success, but it does not guarantee it.
(1) See PSE « 5 papers… in 5 minutes ! » December 2014, https://www.parisschoolofeconomics.eu/en/economics-for-everyone/for-a-wider-audience/5-papers-in-5-minutes/december-2014/coordination-with-communication-under-oath/
(2) In similar proportions to those seen when “real” people interact using effective means of communication
Original titles : “Fluid intelligence and cognitive reflection in a strategic environment: evidence from dominance-solvable games” et “Cognitive ability and the effect of strategic uncertainty”
Published in : Frontiers in Psychology, Vol. 8, Article 1188 (2015) et Theory and Decision, Vol. 81(1), pp.101-122 (2016)
Available at : https://hal.archives-ouvertes.fr/hal-01359231/ et https://halshs.archives-ouvertes.fr/halshs-01261036/
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