May 2005 issue contents
Committees Versus Individuals: An Experimental Analysis of Monetary Policy Decision-Making - IJCB - May 2005

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 other's interest rate decisions.

JEL Codes: C91, C92, E5

Full article (PDF, 25 pages 197 kb)