Committees Versus Individuals: An Experimental Analysis of Monetary Policy Decision-Making

12 Pages Posted: 2 May 2005

See all articles by Clare Lombardelli

Clare Lombardelli

Bank of England - Monetary Analysis

James Talbot

Bank of England - Monetary Analysis

James Proudman

Bank of England, Monetary Instruments and Markets Division

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Abstract

This article reports the results of an experimental analysis of monetary policy decision-making under uncertainty. The experiment used a large sample of economically literate undergraduate and postgraduate students from the London School of Economics to play a simple monetary policy game, both as individuals and in committees of five players. The result - that groups made better decisions than individuals - accords with a previous study in the United States with Princeton University students. The experiment also attempted to establish why group decision-making is superior: although some of the improvement was related to committees using majority voting when making decisions, there was a significant additional committee benefit associated with members being able to observe each other's voting behaviour.

Suggested Citation

Lombardelli, Clare and Talbot, James and Proudman, James, Committees Versus Individuals: An Experimental Analysis of Monetary Policy Decision-Making. Available at SSRN: https://ssrn.com/abstract=708943

Clare Lombardelli (Contact Author)

Bank of England - Monetary Analysis ( email )

James Talbot

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

James Proudman

Bank of England, Monetary Instruments and Markets Division ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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