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Committees versus individuals: an experimental analysis of monetary policy decision-making

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  • Lombardelli, Clare

    (Bank of England)

  • James Proudman
  • James Talbot
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    Abstract

    We 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 Info

    Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 142.

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    Date of creation: 04 Jun 2003
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    Handle: RePEc:ecj:ac2003:142

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    Keywords: monetary policy; experimental economics; central banking; uncertainty;

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    Cited by:
    1. 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.
    2. Katerina Smidkova, 2003. "Methods Available to Monetary Policy Makers to Deal with Uncertainty," Macroeconomics 0310002, EconWPA.

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