ABSTRACT
The ubiquity of relatively simple games such as the prisoner’s dilemma, battle of the sexes, and chicken has shifted the focus of research on interactive decisions away from hierarchical organizations (Hausken, 1995b). In contrast to these simple games, in hierarchical organizations the within-group conflicts are embedded in higher levels of competition between the groups. Although a large body of research in social psychology suggests that individuals solve problems differently than groups and that individual and collective rationality do not always work in the same direction, there have been few theoretical attempts, and even fewer experimental studies, on how individuals make decisions in conflict situations when between-group effects are accounted for. This is due, in part, to the fact that rational choice models developed within economics and descriptive models developed within social psychology often underplay the fact that in many social situations of interest a group operates in the context of other groups.
