In class, it was mentioned that in aggregate, people tend to make good decisions. This is because while there is variability amongst individuals, their decisions generally tend to fluctuate around the optimal decision. While this does occur in many situations, there are also other conditions that can cause a group to make poor decisions. This phenomenon has been dubbed “groupthink.” Groupthink is a model of how individuals can behave in groups to come up with poor decisions. While there are several factors that can cause poor decisions to be made, the most central to the model is the concept of group cohesion. The idea is that individuals will highly value the cohesion of the group, possibly more than they value making an optimal decision. As such, an individual may not speak out against the initial leaning of the group for fear of threatening the cohesion of the group. This stifles dissent and causes hastier, poorly thought out decisions. Groupthink is an old idea (dating back to 1972). The article that I read (see below) gives a good description of groupthink: how it works, its predictions, the major empirical work done on it, and the general state of the theory today.

Group decision making can be modeled in a way that we have modeled other decision making processes. For simplicity, the decision should be a binary (“yay” or “nay”) decision. Suppose that, like in our information cascade models, everyone has their own private signal. Also suppose that it is an open discourse, and everyone can either choose to respond “yay” or “nay.” A crucial variable in this particular model will be group cohesion. If group cohesion is high, an individual’s payoff will not be determined on the outcome of the decision, rather his/her payoff will be determined on whether or not cohesion was maintained (and therefore the individual should elect to not dissent from the direction the group is leaning towards). If this condition is met, the individual’s decisions are likely to resemble an information cascade, not because (or not fully because) people infer that the others had good signals, but because the payoff of the group making a good decision is less (to the individual) than maintenance of group cohesion. Therefore, provided group cohesion is high, once an individual perceives group consensus is arising he/she will conform to this decision regardless of his/her personal signal.

The above is of course a simplification, but the overarching point is that groups are fallible. While sometimes groups decision making results in better decisions than an individual, this is qualified by the nature of the group and the individuals comprising the group.

Article: “Groupthink: an examination of theoretical issues, implications, and future research suggestions” by Marc D. Street.

http://sgr.sagepub.com.proxy.library.cornell.edu/cgi/reprint/28/1/72