Teams take the better risks

One reason why decision makers are often teams and not individuals may be that team decisions comply more closely with economic rationality. We compare individual and team decisions, when systematic deviations from the expected utility theory (EUT) and the portfolio selection theory (PST) are to be expected. We find almost no evidence for the greater compliance of team decisions with the principles of EUT. However, there is substantial evidence for the consistency of team decisions with the PST. Compared to individuals, teams accumulate significantly more expected value at a significantly lower total risk (measured in standard deviation, S.D.).