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Group Polarization in a Model of Information Aggregation

Author

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  • Nicolas Roux
  • Joel Sobel

Abstract

Experiments identify the empirical regularity that groups tend to make decisions that are more extreme, but in the same direction as the tendency of individual members of the group. We present a model of information aggregation consistent with these findings. We assume individuals and groups are rational decision makers facing monotone statistical decision problems where groups and individuals have common preferences, but groups have superior information. We provide conditions under which the distribution of the optimal actions of the group is more variable than the distribution of actions taken by individuals. (JEL D71, D83)

Suggested Citation

  • Nicolas Roux & Joel Sobel, 2015. "Group Polarization in a Model of Information Aggregation," American Economic Journal: Microeconomics, American Economic Association, vol. 7(4), pages 202-232, November.
  • Handle: RePEc:aea:aejmic:v:7:y:2015:i:4:p:202-32
    Note: DOI: 10.1257/mic.20140252
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    References listed on IDEAS

    as
    1. Sobel, Joel, 2014. "On the relationship between individual and group decisions," Theoretical Economics, Econometric Society, vol. 9(1), January.
    2. Levy, Haim & Kroll, Yoram, 1978. "Ordering Uncertain Options with Borrowing and Lending," Journal of Finance, American Finance Association, vol. 33(2), pages 553-574, May.
    3. Robert F. Bordley, 1982. "A Multiplicative Formula for Aggregating Probability Assessments," Management Science, INFORMS, vol. 28(10), pages 1137-1148, October.
    4. Hong, Lu & Page, Scott, 2009. "Interpreted and generated signals," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2174-2196, September.
    5. Kfir Eliaz & Debraj Ray & Ronny Razin, 2006. "Choice Shifts in Groups: A Decision-Theoretic Basis," American Economic Review, American Economic Association, vol. 96(4), pages 1321-1332, September.
    6. Joel Sobel, 2014. "On the relationship between individual and group decisions," Levine's Working Paper Archive 786969000000000950, David K. Levine.
    7. Kaas, Rob & Dannenburg, Dennis & Goovaerts, Marc, 1997. "Exact Credibility for Weighted Observations," ASTIN Bulletin, Cambridge University Press, vol. 27(2), pages 287-295, November.
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    Citations

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    Cited by:

    1. Xiu Chen & Fuhai Hong & Xiaojian Zhao, 2020. "Concentration and variability of forecasts in artificial investment games: an online experiment on WeChat," Experimental Economics, Springer;Economic Science Association, vol. 23(3), pages 815-847, September.
    2. David Dillenberger & Colin Raymond, 2016. "Group-Shift and the Consensus Effect, Second Version," PIER Working Paper Archive 16-015, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 30 Sep 2016.
    3. Athey, Susan & Levin, Jonathan, 2018. "The value of information in monotone decision problems," Research in Economics, Elsevier, vol. 72(1), pages 101-116.
    4. Dillenberger, David & Raymond, Collin, 2019. "On the consensus effect," Journal of Economic Theory, Elsevier, vol. 183(C), pages 384-416.
    5. Amir, Rabah & Lazzati, Natalia, 2016. "Endogenous information acquisition in Bayesian games with strategic complementarities," Journal of Economic Theory, Elsevier, vol. 163(C), pages 684-698.
    6. Honryo, Takakazu, 2018. "Risky shifts as multi-sender signaling," Journal of Economic Theory, Elsevier, vol. 174(C), pages 273-287.

    More about this item

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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