Are Groups Riskier Decision Makers than Individuals

"Individuals process information in two general ways: individuated and categorically. The individuated process, labeled online or controlled, occurs when individuals attend to each input separately with their dull attention. Indicated processing is highly effortful and demanding, and although managers try to be rational, they often lack the cognitive capacity to process information in a piecemeal fashion. Therefore, most cognition is hierarchical in nature, with input information processed by categories. Without these categories, individuals would be overwhelmed trying to absorb and make sense of all the stimuli around them. These cognitive categories, often labeled schemata, scripts, or mental models, facilitate information processing in several ways. Schema-consistent information is more easily recognized, encoded, and retrieved from memory. Schemas allow individuals to process more information more quickly, and they prevent individuals from getting distracted irrelevant information" (Houghton et al., 2000).…