Abstract
Research in psychology has found that subjects regularly exhibit a conjunction fallacy in probability judgments. Additional research has led to the finding of other fallacies in probability judgment, including disjunction and conditional fallacies. Such analyses of judgments are critical because of the substantial amount of probability judgment done in accounting, business and organizational settings. However, most previous research has been conducted in the environment of a single decision maker. Since business and other organizational environments also employ groups, it is important to determine the impact of groups on such cognitive fallacies. This paper finds that groups substantially mitigate the impact of probability judgment fallacies among the sample of subjects investigated. The key finding of this paper is the analysis of the apparent manner in which groups make such decisions. A statistical analysis, based on a binomial distribution, suggests that groups investigated here did not use consensus. Instead, if any one member of the group has correct knowledge about the probability relationships, then the group uses that knowledge and does not exhibit fallacy in probability judgment. Having a computational model of the group decision making process provides a basis for developing computational models that can be used to simulate “mirror worlds” of reality or model decision making in real world settings.
Similar content being viewed by others
References
Benson G, Curley S, Smith G (1995) Belief assessment: an underdeveloped phase of probability assessment. Manag Sci 41(10): 1639–1653
Black D (1958) The theory of committees and elections. Cambridge University Press, London
Camerer CF (1987) Do biases matter in markets? Experimental evidence. Am Econ Rev 77(5): 981–997
Dalkey NC (1969) The delphi method: an experimental study of group opinion. June 1969, Rand RM-5888-PR
Davis J (1992) Some compelling intuitions about group consensus decisions, theoretical and empirical research, and interpersonal aggregation phenomena: selected examples. Organ Behav Hum Decis Process 52: 3–38
Dixon W, Massey F (1969) Introduction to statistical analysis. McGraw-Hill, New York
Einhorn H, Hogarth R (1986) Judging probable cause. Psychol Bull 99(1): 3–19
Gelernter D (1992) Mirror worlds. Oxford University Press, New York
Griffin D, Gonzalez R, Varey C (2001) The heuristics and biases approach to judgment under uncertainty. In: Tesser A, Schwarz N (eds) Blackwell handbook of social psychology. Wiley-Blackwell, Oxford
Hastie R, Dawes R (2002) Rational choice in an uncertain world. Sage, Thousand Oaks
Hinsz V, Tindale R, Nagao D (2008) Accentuation of information processes and biases in group judgments integrating base-rate and case specific information. J Exp Soc Psychol 44: 116–126
Ijiri Y (1975) Theory of accounting measurement, studies in accounting research. American Accounting Association, Sarasota
Kerr N, MacCoun R, Kramer G (1996) Bias in judgment: comparing individuals and groups. Psychol Rev 103(4):687–719
Lenat DB, Guha RV (1989) Building large knowledge-based systems: representation and inference in the Cyc project. Addison-Wesley, Reading
McCarthy J (1997) Knowledge set and Knowledge base. http://www-formal.stanford.edu/jmc/model/node12.html
Mohommed S, Ringseis E (2001) Cognitive diversity and consensus in group decision making. Organ Behav Group Decis Process 85(2): 310–335
O’Leary DE, Kuokka D, Plant R (1997) Artificial intelligence and virtual organizations. Commun ACM 40(1): 52–59
O’Leary DE (2008) Supporting decisions in real time enterprises. Inf Syst e-Bus Manag 6(3): 239–255
Schum D (1987) Evidence and inference for the intelligence analyst. University Press of America, Lanham
Shafer G, Tversky A (1985) Languages and designs for probability judgment. Cogn Sci 9: 309–335
Simmel G (1950) The sociology of Georg Simmel. In: Wolff K (ed) Free Press, New York
Simon H (1957) Administrative behavior. 2. Free Press, New York
Simon H (1981) The sciences of the artificial. 2. MIT Press, Cambridge
Smedslund J (1990) A critique of Tversky and Kahneman’s distinction between fallacy and misunderstanding. Scand J Psychol 31: 110–120
Sprague R, Carlson E (1982) Building effective decision support systems. Prentice Hall, Englewood Cliffs
Stringer K, Stewart T (1985) Statistical techniques for analytic review in auditing, deloitte. Haskins and Sells, New York
Tversky A (1994) A new approach to subjective probability. Unpublished paper presented at the behavioral decision research in management conference, May 22, 1994, MIT Sloan School of Management
Tversky A, Kahneman D (1983) Extensional versus intuitive reasoning: the conjunction fallacy in probability judgment. Psychol Rev 90(4): 293–315
Weick K (1969) The social psychology of organizing. Addison-Wesley, Reading
Windschitl PD (2002) Judging the accuracy of a likelihood judgment: the case of smoking risk. J Behav Decis Mak 15: 19–35
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
O’Leary, D.E. The Emergence of Individual Knowledge in a Group Setting: Mitigating Cognitive Fallacies. Group Decis Negot 20, 3–18 (2011). https://doi.org/10.1007/s10726-010-9201-y
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10726-010-9201-y