Committees Versus Individuals: An Experimental Analysis of Monetary Policy Decision Making
by Clare Lombardelli, James Proudman, and James Talbot
Bank of England
We report the results of an experimental analysis of monetary
policy decision making under uncertainty. A large sample
of economics students played a simple monetary policy
game, both as individuals and in committees of five players.
Our findings - that groups make better decisions than
individuals - accord with previous work by Blinder and Morgan.
We also attempt to establish why this is so. Some of the
improvement is related to the ability of committees to strip
out the effect of bad play, but there is a significant additional
improvement, which we associate with players learning from
each otherís interest rate decisions.
JEL Codes: C91, C92, E5
Full article (PDF, 25 pages 197 kb)