Are Groups Better Than Individuals at Making Decisions? An Experimental Study on Newsvendor Problem

We investigate the differences between groups and individuals in newsvendor ordering behavior by a laboratory experiment under the tournament competitive environment. We also study the association between newsvendor decision making and the decision-making styles measured by the General Decision-making Style (GDMS) inventory. We observe that group decision making is not always superior to individual decision making. Groups only make better ordering decisions and earn higher profit on average than individuals in the low profit condition. In addition, groups take longer time than individuals. Our results suggest that decision-making style is to some extend associated with newsvendor decision making.