Too Much Trust in Group Decisions: Uncovering Hidden Profiles by Groups and Markets

A crucial challenge for organizations is to pool and aggregate information effectively. Traditionally, organizations have relied on committees and teams, but recently many organizations have explored the use of information markets. In this paper, the authors compared groups and markets in their ability to pool and aggregate information in a hidden-profiles task. In Study 1, groups outperformed markets when there were no conflicts of interest among participants, whereas markets outperformed groups when conflicts of interest were present. Also, participants had more trust in groups to uncover hidden profiles than in markets. Study 2 generalized these findings to a simple prediction task, confirming that people had more trust in groups than in markets. These results were not qualified by conflicts of interest. Drawing on experienced forecasters from Good Judgment Open, Study 3 found that familiarity and experience with markets increased the endorsement and use of markets relative to traditional committees.

Collective Choice, Collaboration, and Communication

This article reviews recent empirical research on collective choice and collaborative problem solving. Much of the collective choice research focuses on hidden profiles. A hidden profile exists when group members individually have information favoring suboptimal choices but the group collectively has information favoring an optimal choice. Groups are notoriously bad at discovering optimal choices when information is distributed to create a hidden profile. Reviewed work identifies informational structures, individual processing biases, and social motivations that inhibit and facilitate the discovery of hidden profiles. The review of collaborative problem-solving research is framed by Larson's concept of synergy. Synergy refers to performance gains that are attributable to collaboration. Recent research has addressed factors that result in groups performing as well as their best member (weak synergy) and better than their best member (strong synergy). Communication dynamics underlying both collective choice and collaborative problem solving are discussed.