Team Decision Making

“None of us is as smart as all of us” – S. Paige

“A camel is a horse designed by committee” – Anonymous

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Some of What We Know about the Good and the Bad of Group (Team)

Decision Making

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There is Good News

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• Groups (committees) improve decision making when judgmental error is random or due to “noise” and not systematic bias since collective decision making cancels out random judgmental errors that are likely to “bracket” truth. – The Wisdom of Crowds.

• Groups also do better when the tasks are more “intellectual”,

i.e., the solution once proposed is clear. However, be wary of shared and flawed mental models, e.g., the “New Economy” and the power of clicks not profits to measure company value.

• Groups also attenuate bias if the bias is uncommon among the members.

• Interacting groups do impact the motivational levels of the participants, e.g., confidence and willingness to implement a decision.

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The Bad and Ugly News • If a majority of group members exhibit a judgmental bias,

than groups do worse than individual judges. This is particularly true for groups operating under a

majority-rule decision scheme. That is, collective decisions will exacerbate biased individual judgments. Examples of such tasks are jury decisions, hiring decisions, and risky investment decisions.

• Interacting groups tend to add noise to judgment, which lowers validity of judgment, .e.g., dollars awards across juries seem to be more varied, not less than the variability of individual judgments..

• Often committees are put together, and managed, in ways that accentuate the bad news.

• The biasing aspects of groups are likely to increase over the time that the group is together.

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Simple (and classic) Model of Group Performance

Group Potential (Composition)

Performance = Group Potential + Process Gains – Process Losses

= Ability (Mean and Distribution of Expertise) + Cognitive Diversity

Conjecture: Sometimes cognitive diversity even trumps ability! Page (2007). That is diversity in opinion may outweigh judgmental skill.

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Wanted, shared goals, not share knowledge or methods.

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Group Process Gains

Group Process Losses

Sources of Process Gains: 1) More information to be shared. 2) Diversity of Thought Strategies or

Tools. 3) Error checking of facts and

reasoning. 4) Incorporation of Different Values. 5) Canceling out of “random” errors –

Wisdom of Crowds.

Sources of Process Losses: 1) Poor and/or biased information

sharing. 2) Herding or Cascades of Opinions. 3) Reinforcement (Polarization) of

attitudes. 4) Conflict from value differences. 5) Social Loafing 6) Conformity. Individuals withheld

information to appear cooperative or avoid conflict

GP = Group Potential + Process Gains – Process Losses

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Special Note: Cognitive Diversity Provides “Wisdom”

• Diverse, independent perspectives (Cognitive Diversity) – Different data/experience – Different training/“model” for interpreting data

• E.g., Dearborn and Simon example of different perspectives on a business case.

– Ideal: Team members bring different training, perspectives, and experiences to the table.

• Processes needed to preserve independence of thought.

–Alfred P. Sloan, Jr., as Chairman at General Motors: “Gentlemen, I take it we are all in complete agreement on the decision here…Then I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about.” (Russo & Schoemaker, p. 164)

Group Composition: The major source of group potential

• Unfortunately, group formation tends to be guided by the principle of similarity among potential group members. Thus, there is likely to be a lot of similarity (high correlation) in the judgments that are formed.

• NOTE, however, it takes approximately a group membership of size 16 with an inter-judge correlation of r =.3 to equal the accuracy of a 4 person group with an inter-judge correlation of r = 0.

• The implication is clear, resources would be better spent on identifying independent (less correlated) judges than our increasing the number of judges.

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What is the “ideal” group size?

–Goals: Accuracy, commitment, value diversity, etc.

– Three, five, or more? –Diversity of opinions– bracketing of

opinions –With diversity, truth supported wins?

–Warning, people tend to underestimate the

increases in process losses associated with larger team size.

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The Wisdom of Crowds

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A simple combination (averaging) of even “independent” judges can be very powerful. Random errors do cancel out. A key is that the combination of judgments “bracket” truth. That is, judgments cannot be too redundant. You want diversity of thought.

Recap: Averaging “works” when estimates bracket the truth and when the probability of identifying the consistently best expect is low.

Bracketing is more likely when judges are independent.

• If all the estimates are too high or too low (no bracketing), then the accuracy of averaging equals mean accuracy but not the accuracy of the best judge.

•

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Beware of the Sources of low bracketing

– Common training, experience, information

– Continued Interacting by the same team members on a task (e.g., Brehmer, 1976; Sherif, 1936)

– Dense social networks* (Burt, 1992)

– Conformity pressures with the group. • When might such conformity pressures be larger?

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Warning: People Don’t Like to Average

• They think averaging leads to mediocre results

– Common belief: The average of two judgments is only as good as the average judge (Larrick & Soll, Man. Sci., 2006)

– This theory is wrong, but is widely held

• People are confident in stable differences in expertise (Ross & Nisbett, 1991), and are overconfident in choosing an expert.

• Consequence: Tend to “chase the expert”

– Beware: Success = Skill + Luck so Experts regress!

Judgmental Biases with Group Decisions:

Examples of Process Gains and Process

Losses with Interacting Groups

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Process Losses

• Do committees avoid individual biases and achieve “process gains” or “process losses” by the sharing of information, error checking, making good tradeoffs by meeting and discussion?

• A quick tour of research that suggests the answer is NO!

• Confirmation bias

• Overconfidence

• Planning fallacy

• Effects on preference

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One Common Group Decision Making Finding (Failure)

• Do groups search for confirming Information? - Schulz-Hardt et al., (2000)

• Results:

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Mean # Items

of Information

Supporting

Information

Conflicting

Information Confirmation Bias

Individual 2.33 1.23 1.07

Group 2.65 1.11 1.54*

*The larger the majority in favor of the initially preferred option the stronger the effect. **The more confident a group is in the correctness of their judgment, the stronger the effect.

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Source of Social Cascades

• Group members tend to evaluate one another more positively when they mention information confirming each other’s preferences instead of information disconfirming these preferences. Mojzisch, A. et al. (JPSP,

2014).

• Thus, there is a tendency for people to simply follow prior opinions that have been expressed without necessary knowing why those opinions were expressed.

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What is the relationship between confidence in and accuracy of judgment with groups? - Plous (1995), Sniezek (1992)

Ten items – 90% Confidence Intervals. • Results:

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Individual Group Statistical Estimated

Individual

Estimated

Group

# Correct

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3.1 4.2 7.4 5.6 7.5

1. Groups are more confident and more accurate, expected 9 out of 10. 2. Overconfidence is slightly reduced but still substantial 3. Devil’s advocacy technique didn’t work. 4. Statistical Pooling of Individuals much better. 5. Illusion of Group Effectiveness

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One Common Group Decision Making Finding: The Planning Fallacy

• Is there a bias in estimates of the time needed to complete a project?

• Does group discussion affect this bias?

Study Individual Group Actual

One

(days)

45.16 42.25 59.31

Two

(days)

1.87 1.07 2.30

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Preferential Group Decision Making

• Groups often reinforce, not mitigate attitudes, i.e., group polarization of risk taking attitudes. That is, some risk-taking leads to more, and some risk-aversion leads to less.

• Groups will reinforce social norms, e.g., leniency in criminal cases, punishment in civil liability (e.g., punitive damage) cases.

• “It is well known that when like-minded people get together, they tend to end up thinking a more extreme version of what they thought before they started to talk.” Cass R. Sunstein, NYT, 9/17/2012.

• Groups often serve as Echo-chambers!

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Example of Group Polarization: Deliberation in Boulder versus

Colorado Springs (Shkade, Sunstein, & Hastie, 2007)

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•Groups of ordinary voters meet in 6-member groups to discuss political issues – same sex civil unions, affirmative action, etc. Their beliefs are measured at the start of discussion and again after discussion.

•One sample is selected in (“The People’s Republic of”) Boulder, Colorado; the other selected in (“The Christian-Military Citadel of”) Colorado Springs.

•On every issue, the groups began with either a Liberal (Boulder) or Conservative (Colorado Springs) leaning … after 15-minutes of discussion most individuals gave more extreme ratings on the discussed issue.

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Do groups help when it really matters?

• Study of 166 investment clubs

• 1991-1997

• Comparison of returns

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0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

S&P Individual Investor

Investment Club Source: Barber & Odean, 2000

Why might committees (teams or groups) perform poorly?

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Why might committees (teams or groups) perform poorly?

• Groups often fail because – Known knowledge may not be shared and used.

• The Hidden Profile Tests.

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Everyone

Has Infor.A B C D E F G H

Candidate 1 X X X X X X X X

Candidate 2 X X X X X

Candidate 3 X X X X

Kate A B C D E F G H

Candidate 1 X X X

Candidate 2 X X X X X

Candidate 3 X X X X

Ken A B C D E F G H

Candidate 1 X X X

Candidate 2 X X X X X

Candidate 3 X X X X

Keith A B C D E F G H

Candidate 1 X X X

Candidate 2 X X X X X

Candidate 3 X X X X

Fully shared information. X is positive information.

Unshared information.

Example of a Hidden Profile Task

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The Common Knowledge Effect

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• Commonly held information is more influential on group decisions, compared to unique information.

– Common information impacts the initial preferences of more team members before the meeting.

– Common information is more likely to be introduced at the meeting, simply because more people have this information.

– Common information is more likely to be repeated in conversation.

– As team converges on an answer, there is a norm of not bringing up new facts.

Hidden Profile Results • Things that don’t help:

– Increasing the amount of discussion

– Increasing the size of the team

– Increased Accountability

• Things that help:

– Leader takes an active role as information manager.

– Make explicit members differential expertise.

– Clear group norm for critical thought rather than maintaining consensus

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Recap

• By design, organizations are filled with people who have different information, expertise, ideas.

• Unfortunately, social interaction in groups often goes against this design. That is, the potential of groups is minimized.

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Wanted – Conflict among ideas, not conflict among people. Instead, we see poor conflict management

• Uneven participation across members

• Social Conformity and norm influence

• Suppression of divergent opinions

• Rush to decide – tension avoidance

• Concern with maintaining group cohesion

• Deference to leader’s position

• Illusion of group unanimity when non exists

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Rank of the Speaker from 1 (most talkative) down … (to 8 - least talkative)

Problem 1: Getting everyone to contribute … “Lions and Mice”: Total amount of talking as a function of

speaker rank - a universal law of social behavior

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Social Conformity

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Test Line

A B C

The classic Asch experiments

Is the test line equal in length to A, B, or C?

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Results of Conformity Research

• When asked to judge individually - 1% wrong

• When one person says "B" before, 3% wrong

• When two people say "B" before, 13 % wrong

• When three people say "B", 33% wrong.

• When 6 say "B" but 1 says "C", 6% wrong (no fear of isolation)*

• Pre-commitment

– paper 8% wrong

– magic pad 14% wrong

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*Truth supported wins. Implications for managing diversity in group membership?

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Motivational forms of process loss: How hard do people work in groups as compared to when people work alone?

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Social Loafing

• Evidence suggests that individuals working in groups may not work as hard as individuals working alone.*

• Reasons for this?

– Link between effort and outcome is weak.

– Diffused responsibility

– “Sucker” effects

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Data on Social Loafing

0 1 2 3 4 5 6 7 0

1

2

3

4

5

Group Size

Sound Pressure Per Person

*There may be cultural differences, e.g., individualistic vs. collective cultures.

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What is GroupThink?

• Groupthink refers to a mode of thinking that persons engage in when concurrence-seeking becomes so dominant in a cohesive in-group that it tends to override realistic appraisal of alternative courses of action.

• Conditions

– "The more amiability and esprit de corps there is among the members of a policy-making in-group, the greater the danger that independent critical thinking will be replaced by groupthink." I. Janis

– A powerful opinionated leader

– Stress

– Lack of an explicit decision-making procedure.

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Symptoms and Products of Group Think

• Sense of Invulnerability

• Stereotype of others

• Increased sense of Morality.

• Illusions of unanimity.

• Self-censorship of conflicting ideas.

• Discussion limited to just a few options.

• Little or no attempt to obtain information from experts within the organization.

• Focus on option initially preferred by majority.

• Ignore disconfirming information.

• Little or no interest in working out contingency plans.

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The dynamics of group decision making: Do you agree with the following statement?

• “As a team converges on a decision – and especially when the leader tips her hand – public doubts about the wisdom of the planned move are gradually suppressed and eventually come to be treated as evidence of flawed loyalty to the team and its leader…Supporters of the decision are the ones given voice.” (D. Kahneman, 2011, p.265).

• Groupthink becomes more and more likely to occur over time.

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Other Failures of Deliberating Groups • Group members ignore their private knowledge and rely

instead on the publicly stated judgments of others. Sunstein and Hastie (2008) refer to this as a “cascade”. – Informational cascades involve the use by one judge of another’s final

judgment without disclosure by the other of what they may know, i.e., the facts and reasoning underlying the judgment. This results in poorer information sharing.

– Reputational cascades or maintaining the good opinion of others. People want to be perceived favorably by other group members. This is increasing true with greater identification with the group.

• Like minded people, having deliberated with one another, become more sure that they are right and thus more extreme in their judgments. Corroborated views are held with greater confidence.

• Both the above “bias” and reputational cascades are likely to increase over time as group members interact more and more together.

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Again, some good news. There are Positives of Group Decisions

• Group decision making does increase feelings of participation, and consequently involvement in the implementation of a decision. This is a BIG advantage of team decision making. Here is where group cohesion is can be so positive.

• Group decision making can provide learning opportunities for group members.

• Group decision making diffuses responsibility. This can be good or bad. Examples?

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Summary – The Good, the Bad, and the Ugly,

• Groups improve decision making when judgmental error is due to “noise” or is random since collective decision making should cancel out random judgmental errors that are likely to “bracket” truth. The Wisdom of Crowds.

• Groups do better when the tasks are more “intellectual”, i.e., the solution once proposed is clear. – However, be wary of shared and flawed mental models.

• Groups also attenuate bias if the bias is uncommon among

the members.

• Interacting groups impact the goals and motivational levels of the participants, e.g., confidence and willingness to implement a decision.

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Summary Continued

• If the task is judgmental, bias is substantial, and a majority of the members exhibit the bias, than groups do worse than individual judges.

• This “Echo-chamber” effect is particularly true for groups operating under a majority-rule decision scheme. That is, collective decisions will exacerbate biased individual judgments. Examples of such tasks are jury decisions, hiring decisions, and risky investments.

• Again, the biasing aspects of groups are likely to increase over the time together.

• Interacting groups, compared to statistical groups (Crowd Wisdom), tend to add noise, which lowers validity of judgment.

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