DP16782 Individual and Collective Information Acquisition: An Experimental Study

Author(s): Jimmy Chan, Alessandro Lizzeri, Pëllumb Reshidi, Wing Suen, Leeat Yariv
Publication Date: December 2021
Keyword(s): collective choice, Experiments, Information Acquisition
JEL(s): C91, C92, D72, D83, D87
Programme Areas: Public Economics, Industrial Organization, Organizational Economics, Political Economy
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16782

Many committees---juries, political task forces, etc.---spend time gathering costly information before reaching a decision. We report results from lab experiments focused on such information-collection processes. We consider decisions governed by individuals and groups and compare how voting rules affect outcomes. We also contrast static information collection, as in classical hypothesis testing, with dynamic collection, as in sequential hypothesis testing. Several insights emerge. Static information collection is excessive, and sequential information collection is non-stationary, producing declining decision accuracies over time. Furthermore, groups using majority rule yield especially hasty and inaccurate decisions. Nonetheless, sequential information collection is welfare enhancing relative to static collection, particularly when unanimous rules are used.