Committees versus individuals: an experimental analysis of monetary policy decision-making
AbstractWe report the results of an experimental analysis of monetary policy decision-making under uncertainty. A large sample of economically literate students from the London School of Economics played a simple monetary policy game, as both individuals and committees of five players. Our findings - that groups make better decisions than individuals - accord with previous work by Blinder and Morgan. The experiment also attempted to establish why group decision-making is superior: although some improvement was related to committees taking decisions by majority voting, a significant additional committee benefit was associated with members being able to share information and observe each other's voting behaviour.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 142.
Date of creation: 04 Jun 2003
Date of revision:
monetary policy; experimental economics; central banking; uncertainty;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-16 (All new papers)
- NEP-CDM-2003-06-16 (Collective Decision-Making)
- NEP-EXP-2003-06-16 (Experimental Economics)
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- Katerina Smidkova, 2003. "Methods Available to Monetary Policy Makers to Deal with Uncertainty," Macroeconomics 0310002, EconWPA.
- Jan Marc Berk & Beata K. Bierut, 2004. "The effects of Learning in Interactive Monetary Policy Committees," MEB Series (discontinued) 2004-01, Netherlands Central Bank, Monetary and Economic Policy Department.
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