, Volume 34, Issue 1, pp 63–88 | Cite as

Individual versus group behavior and the role of the decision making procedure in gift-exchange experiments

  • Martin G. Kocher
  • Matthias Sutter
Original Paper


We test for behavioral differences between groups and individuals in gift-exchange experiments. Related studies in economics establish group behavior as often closer to the standard game-theoretic equilibrium under the assumptions of rationality and selfishness. We show that this result may depend crucially on the decision making procedure within groups and the nature of the task. A novel experimental decision making protocol opens the black box of group decision making and allows tracking important features of the group interaction process. We are also able to show that acting in a group may shift initial individual choices.


Gift-exchange experiment Group behavior Individual behavior Decision making Reciprocity 

JEL Classification

C72 C91 C92 D70 


We would like to thank two anonymous referees as well as participants at the Western Economic Association Conference 2002, at the Royal Economic Society Meeting 2003, at the Verein für Socialpolitik Meeting 2003, at the Austrian Economic Association Meeting 2005 and seminar participants in Innsbruck and Jena for many helpful comments. Anke Jungwirth provided excellent research assistance. All remaining errors are ours, of course. Financial assistance by the Center for Experimental Economics at the University of Innsbruck (sponsored by the Raiffeisen Landesbank Tirol) and by the Austrian National Bank (Jubiläumsfonds-Projekt Nr. 9879) is gratefully acknowledged.


  1. Andreoni J, Vesterlund L (2001) Which is the fair sex? Gender differences in altruism. Quarterly J Econ 116:293–312CrossRefGoogle Scholar
  2. Baron RS, Kerr NL, Miller N (1992) Group process, group decision, group action. Brooks/Cole Pub. Co., Pacific GroveGoogle Scholar
  3. Berg J, Dickhaut J, McCabe K (1995) Trust, reciprocity, and social history. Games Econ Behav 10:122–142CrossRefGoogle Scholar
  4. Bishop GD, Myers DG (1974) Informational influences in group discussion. Organ Behav Hum Perform 12:92–104CrossRefGoogle Scholar
  5. Blinder AS, Morgan J (2005) Are two heads better than one? An experimental analysis of group vs. individual decision making. Journal of Money, Credit and Banking, 37:789–812Google Scholar
  6. Bone J, Hey J, Suckling J (1999) Are groups more (or less) consistent than individuals? J Risk Uncertain 8:63–81CrossRefGoogle Scholar
  7. Bornstein G, Kugler T, Ziegelmeyer A (2004) Individual and group decisions in the centipede game: are groups more rational players? J Exp Soc Psychol 40:599–605CrossRefGoogle Scholar
  8. Bornstein G, Yaniv I (1998) Individual and group behavior the ultimatum game: are groups more ‘rational’ players?’ Exp Econ 1:101–108Google Scholar
  9. Bosman R, Henning-Schmidt H, van Winden F (2006) Exploring group decision making in a power-to-take experiment. Experimental Econ, 9:35–51Google Scholar
  10. Burnstein E, Vinokur A, Trope Y (1973) Interpersonal comparison versus persuasive argument: a more direct test of alternative explanations for group-induced shifts in individual choices. J Soc Psychol 9:236–245Google Scholar
  11. Camerer CF (2003) Behavioral game theory. Princeton University Press, PrincetonGoogle Scholar
  12. Cason TN, Mui V (1997) A laboratory study of group polarization in the team dictator game. Econ J 107:1465–1483CrossRefGoogle Scholar
  13. Chalos P, Pickard S (1985) Information choice and cue use: An experiment in group information processing. J Appl Psychol 70:634–641CrossRefGoogle Scholar
  14. Charness G (2000) Responsibility and effort in an experimental labor market. J Econ Behav Organ 42:375–384CrossRefGoogle Scholar
  15. Cooper D, Kagel J (2005) Are two heads better than one? Team versus individual play in signaling games. Am Econ Rev 95:477–509CrossRefGoogle Scholar
  16. Cox JC (2002) Trust, reciprocity, and other-regarding preferences: groups vs. individuals and males vs. females. In: Zwick R, Rapoport A (eds) Advances in experimental business research. Kluwer Academic Publishers, Dordrecht, pp 331–350Google Scholar
  17. Cox JC, Hayne SC (2003) When does free riding promote rational bidding? Working Paper, November 2003Google Scholar
  18. Davis JH (1992) Some compelling intuitions about group consensus decisions, theoretical and empirical research, and interpersonal aggregation phenomena: Selected Examples, 1950–1990. Organ Behav Hum Decis Process 52:3–38CrossRefGoogle Scholar
  19. Eckel CC, Grossman PJ (1998) Are women less selfish than men? Evidence from dictator experiments. Econ J 108:726–735CrossRefGoogle Scholar
  20. Eckel CC, Grossman PJ (2001) Chivalry and solidarity in ultimatum games. Econ Inq 39:171–188CrossRefGoogle Scholar
  21. Eliaz K, Ray D, Razin R (2006) Choice shifts in groups: a decision-theoretic basis. Am Econ Rev 96:1321–1332CrossRefGoogle Scholar
  22. Fehr E, Falk A (1999) Wage rigidity in a competitive incomplete contract market. J Polit Econ 107:106–134CrossRefGoogle Scholar
  23. Fehr E, Kirchler E, Weichbold A, Gächter S (1998a) When social norms overpower competition: gift exchange in experimental labor markets. J Labor Econ 16:324–351CrossRefGoogle Scholar
  24. Fehr E, Kirchsteiger G, Riedl A (1993) Does fairness prevent market clearing? An experimental investigation. Quarterly J Econ 108:437–460CrossRefGoogle Scholar
  25. Fehr E, Kirchsteiger G, Riedl A (1998b) Gift exchange and reciprocity in competitive experimental markets. Eur Econ Rev 42:1–34CrossRefGoogle Scholar
  26. Fellner G, Güth W (2003) What limits emotional escalation? Varying threat power in an ultimatum experiment. Econ Lett 80:53–60CrossRefGoogle Scholar
  27. Fischbacher U (1999) Z-tree: Zurich toolbox for readymade economic experiments. Working paper No. 21, Institute for Empirical Research in Economics, University of ZurichGoogle Scholar
  28. Hannan RL, Kagel JH, Moser DV (2002) Partial gift exchange in an experimental labor market: impact of subject population differences, productivity differences and effort requests on behavior. J Labor Econ 20:923–951CrossRefGoogle Scholar
  29. Hastie R (1986) Review essay: experimental evidence on group accuracy. In: Owen G, Grofman B (eds) Information pooling and group decision making. JAI Press, Westport, CT, pp 129–157Google Scholar
  30. Henning-Schmidt H (1999) Bargaining in a video experiment – determinants of boundedly rational behavior. Lecture notes in economics and mathematical systems, vol 467. Berlin, Springer-VerlagGoogle Scholar
  31. Insko C, Pinkley R, Hoyle R, Dalton B, Hong G, Slim R, Landry P, Holton B, Ruffin P, Thibaut J (1987) Individual versus group discontinuity: the role of intergroup contact. J Exp Soc Psychol 23:250–267CrossRefGoogle Scholar
  32. Insko C, Hoyle R, Pinkley R, Hong G, Slim R, Dalton G, Lin Y, Ruffin W, Dardis G, Bernthal P, Schopler J (1988) Individual-group discontinuity: the role of a consensus rule. J Exp Soc Psychol 24:505–519CrossRefGoogle Scholar
  33. Kerr NL, MacCoun RJ, Kramer GP (1996) Bias in judgment: comparing individuals and groups. Psychol Rev 103:687–719CrossRefGoogle Scholar
  34. Kocher MG, Strauß S, Sutter M (2006) Individual or team decision making—Causes and consequences of self-selection. Games and Economic Behavior 56:259–270CrossRefGoogle Scholar
  35. Kocher MG, Sutter M (2005) The decision maker matters. Individual versus team behavior in experimental beauty-contest games. Econ J 115:200–223CrossRefGoogle Scholar
  36. Kugler T, Bornstein G, Kocher MG, Sutter M (2007) Trust between individuals and groups: groups are less trusting than individuals but just as trustworthy. J Econ Psychol, forthcomingGoogle Scholar
  37. Levine JM, Moreland RL (1998) Small groups. In: Gilbert DT, Fiske ST, Lindzey G (eds) Handbook of social psychology, vol 2, 4th edn. pp 415–469Google Scholar
  38. Moscovici S (1985) Social influence and conformity. In: Lindzey G, Aronson E (eds) Handbook of social psychology, vol 2, 3rd edn. pp 347–412Google Scholar
  39. Moscovici S, Zavalloni M (1969) The group as polarizer of attitudes. J Pers Soc Psychol 11:125–135Google Scholar
  40. Myers DG, Lamm H (1976) The group polarization phenomenon. Psychol Bull 83:602–627CrossRefGoogle Scholar
  41. Prather LJ, Middleton KL (2002) Are n+1 head better than one? The case of mutual fund managers. J Econ Behav Organ 47:103–120CrossRefGoogle Scholar
  42. Rockenbach B, Sadrieh A, Matauschek B (2007) Teams take the better risks. J Econ Behav Organ, forthcomingGoogle Scholar
  43. Roth AE, Erev I (1995) Learning in extensive-from games: experimental data and simply dynamic models in the intermediate term. Games Econ Behav 8:164–212CrossRefGoogle Scholar
  44. Schopler J, Insko C (1992) The discontinuity effect in interpersonal and intergroup relations: generality and mediation. In: Stroebe W, Hewstone M (eds) European view of social psychology, vol 3. Chichester, England Wiley, pp 121–151Google Scholar
  45. Sutter M (2005) Are four heads better than two. An experimental beauty-contest game with teams of different size? Econ Lett 88:41–46CrossRefGoogle Scholar
  46. Sutter M, Kocher M, Bosman R, van Winden F (2003) Experimental evidence of the importance of gender pairing in bargaining. Papers on Strategic Interaction 27/2003, Max-Planck Institute for Research into Economic Systems, JenaGoogle Scholar
  47. Sutter M, Kocher M, Strauß S (2005) Individuals and teams in UMTS-licence auctions. Working Paper, University of InnsbruckGoogle Scholar
  48. Teger AI, Pruitt DG (1967) Components of group risk taking. J Exp Soc Psychol 3:189–205CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Department of Economics, Institute of Public FinanceUniversity of InnsbruckInnsbruckAustria
  2. 2.University of AmsterdamAmsterdamNetherlands
  3. 3.University of CologneKölnGermany

Personalised recommendations