Committees and Decision Making

48 Pages Posted: 20 Mar 2020

See all articles by Neeraj Arora

Neeraj Arora

Wisconsin School of Business

Kenneth A. Kavajecz

Edgewood College; Phoenix Rising Advisory

Yuko Onozaka

University of Stavanger

Siri Valseth

University of Stavanger Business School

Date Written: February 29, 2020

Abstract

We study the interactions and strategies of economic agents within a business committee to better understand how decisions are made in an important group setting. Specifically, we study the Federal Reserve’s Federal Open Market Committee (FOMC) monetary policy actions and meeting transcripts to understand how the committee members discussion impacts the chosen monetary policy. The results show that after controlling for the impact of macroeconomic variables related to the Federal Reserve’s dual mandate and past policy actions, variables which measure members efforts in interpreting the current economic data and persuading other members through cognitive and affective persuasion strategies have economically and statistically significant effect on the meeting outcomes. The implication is that for a business committee to arrive at a group decision, the members need to digest/interpret the relevant information, spend time persuading other members using logic/emotion in order to aggregate member viewpoints to a consensus decision. Thus, the interpretation processes and persuasion methods that are used within a committee discussion have a non-trivial impact on the final outcome.

Keywords: Committee Decisions, Group Decisions, Text Analysis, Information Interpretation, Cognitive Persuasion, Affective Persuasion

JEL Classification: M1, E5, E52, E58

Suggested Citation

Arora, Neeraj and Kavajecz, Kenneth A. and Onozaka, Yuko and Valseth, Siri, Committees and Decision Making (February 29, 2020). Available at SSRN: https://ssrn.com/abstract=3546986 or http://dx.doi.org/10.2139/ssrn.3546986

Neeraj Arora

Wisconsin School of Business ( email )

975 University Ave
Madison, WI 53706
United States
6082621990 (Phone)

Kenneth A. Kavajecz (Contact Author)

Edgewood College ( email )

1000 Edgewood College Dr.
Madison, WI 53711
United States
6087704677 (Phone)

Phoenix Rising Advisory ( email )

519 NORTH PINCKNEY STREET
MADISON, WI 53703
United States
6087704677 (Phone)

HOME PAGE: http://www.pr-advisory.com

Yuko Onozaka

University of Stavanger ( email )

Kjell Arholms gate 37
Stavanger, 4036
Norway

Siri Valseth

University of Stavanger Business School ( email )

PB 8002
Stavanger, 4036
Norway

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