Are Two Heads Better Than One?: An Experimental Analysis of Group vs. Individual Decisionmaking
AbstractWe report the results of two sets of experiments comparing decisions made as individuals to those made in groups under majority and unanimity rule. The first setup posed a purely statistical problem devoid of any economic content: Subjects were asked to guess the composition of an (electronic) urn filled with blue balls and red balls. The second mimicked the problem faced by central bankers: Subjects were asked to steer an (electronic model of an) economy by manipulating the interest rate. The results were both striking and strikingly consistent. Neither experiment supported the commonly-held belief that groups make decisions more slowly than individuals. Both experiments found that groups, on average, made better decisions than individuals. Surprisingly, groups outperformed individuals by almost exactly the same margin in each experiment. Finally, there were practically no differences between group decisions made by majority rule and group decisions made under a unanimity requirement.
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Bibliographic InfoPaper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 130.
Date of creation: May 2001
Date of revision:
Other versions of this item:
- Alan S. Blinder & John Morgan, 2000. "Are Two Heads Better Than One?: An Experimental Analysis of Group vs. Individual Decisionmaking," NBER Working Papers 7909, National Bureau of Economic Research, Inc.
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
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- Glenn Rudebusch & Lars E.O. Svensson, 1999.
"Policy Rules for Inflation Targeting,"
in: Monetary Policy Rules, pages 203-262
National Bureau of Economic Research, Inc.
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- Glenn D. Rudebusch & Lars E. O. Svensson, 1998. "Policy rules for inflation targeting," Working Papers in Applied Economic Theory 98-03, Federal Reserve Bank of San Francisco.
- Svensson, Lars E.O. & Rudebusch , Glenn, 1998. "Policy Rules for Inflation Targeting," Seminar Papers 637, Stockholm University, Institute for International Economic Studies.
- Rudebusch, G.D. & Svensson, L.E.O., 1998. "Policy Rules for Inflation Targeting," Papers 637, Stockholm - International Economic Studies.
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Reserve Bank of New Zealand Discussion Paper Series
G97/3, Reserve Bank of New Zealand.
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