Costs of collective wisdom: How resources influence information aggregation in organizational decision making

Abstract

Behavioral theories of organizational decision making highlight the importance of decision rules for information aggregation, which are used to combine individuals’ evaluations of alternatives into collective choice. We examine how resource constraints affect the ability to make effective decisions with aggregation rules, including majority voting, averaging opinions, and delegating to experts. Using a series of computational experiments, we find that which rule is best depends on how an organization uses scarce resources to improve members’ knowledge of alternatives (accuracy resources) and include them in decisions (inclusion resources). By demonstrating the interdependence of resources and aggregation rules, we draw attention to the resource costs required to harness collective wisdom in organizations. We discuss implications for research on information aggregation and the design of organizational decision architectures and outline new directions for research.