Social Influence Undermines the Wisdom of the Crowd in Sequential Decision Making

Teams, juries, electorates, and committees must often select from various alternative courses of action what they judge to be the best option. The phenomenon that the central tendency of many independent estimates is often quite accurate—“the wisdom of the crowd”—suggests that group decisions based on plurality voting can be surprisingly wise. Recent experimental studies demonstrate that the wisdom of the crowd is further enhanced if individuals have the opportunity to revise their votes in response to the independent votes of others. We argue that this positive effect of social information turns negative if group members do not first contribute an independent vote but instead cast their votes sequentially such that early mistakes can cascade across strings of decision makers. Results from a laboratory experiment confirm that when subjects sequentially state which of two answers they deem correct, majorities are more often wrong when subjects can see how often the two answers have been chosen by previous subjects than when they cannot. As predicted by our theoretical model, this happens even though subjects’ use of social information improves the accuracy of their individual votes. A second experiment conducted over the internet involving larger groups indicates that although early mistakes on easy tasks are eventually corrected in long enough choice sequences, for difficult tasks wrong majorities perpetuate themselves, showing no tendency to self-correct.