Individuals, groups, and organizations

The importance of groups in decision making and social interaction is apparent. In addition to the compelling social reasons for group cooperation and coordinated action, it is also clear that information-processing and physical limitations of individuals imply the desirability, indeed necessity, that certain problems be solved by groups. For example, typical business planning problems require the specialized skills of experts in marketing, finance, operations, and human resources. Few individuals possess all of these skills and knowledge, making a group of experts unavoidable. Similarly, scientific problems as well as sociopolitical decision making usually require the expertise of more than one individual. Finally, social and family support groups are important to most of us in coping with complexity and uncertainty.

Our aim in this chapter and the next is to introduce important concepts for the descriptive and prescriptive analysis of groups, and to illustrate these with applications to some classic group decision-making problems. In doing so, we shall be following two different streams of research on groups. The first stream, based on theoretical and experimental work in social and industrial psychology, has been concerned with the decision processes used in groups. This first stream of research will be covered in this chapter. The second stream, based on economics and modern game theory, is normative, formal, and abstract in character, and will be the subject of the next chapter.