The Complexity of Collective Decision

Abstract

This paper is about the dynamics of collective decision when an individual adapts his rational decision to the others'. We consider an organization of heterogeneous agents, in which each agent faces the binary decision problem. The standard way of modeling a collective decision is to assume everyone has the same value or payoff structure. This paper considers collective decision of agents with heterogeneous payoffs. We obtain and classify rational decision rules of heterogeneous agents into a few categories depending on their idiosyncratic payoff structure. We also obtain the micro–macro dynamics that relate the aggregate collective decision with the underlying individual decisions. We investigate the roles of particular types of agents such as hardcore, conformists, and nonconformists. We show that agents' rational behavior combined with the others produce stable orders, and sometimes complex cyclic behavior.