Group Judgments: Deliberation, Statistical Means, and Information Markets

Abstract:     
How can groups elicit and aggregate the information held by their individual members? The most obvious answer involves deliberation. For two reasons, however, deliberating groups often fail to make good decisions. First, the statements and acts of some group members convey relevant information, and that information often leads other people not to disclose what they know. Second, social pressures, imposed by some group members, often lead other group members to silence themselves because of fear of disapproval and associated harms. The unfortunate results include the propagation of errors; hidden profiles; cascade effects; and group polarization. A variety of steps should be taken to ensure that deliberating groups obtain the information held by their members. Because of their ability to aggregate privately held information, information markets substantial advantages over group deliberation. These points bear on discussion of normative issues, in which deliberation might also fail to improve group thinking.

Keywords: Cascades, group polarization, statistical groups, deliberation, information markets, prediciton markets

Working Paper Series