The importance of expertise in group decisions
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The importance of expertise in group decisions Alexander Lundberg1 Received: 14 September 2018 / Accepted: 3 April 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Prior to a collective binary choice, members of a group receive binary signals correlated with the better option. A larger group size may produce less accurate decisions, but expertise is everywhere beneficial. If a group accounts for correlation in signals, a relatively expert member puts an upper bound on the probability of a false belief. The bound holds for any group size and signal distribution. Furthermore, a population investing in expertise is better off cultivating a small mass of elites than adopting an egalitarian policy of education.
1 Introduction Expert advice pervades modern society. Patients visit doctors for diagnoses. Journalists cite academics in their stories. Firms hire consultants to evaluate mergers. At its core, expertise is information, and we hope experts make more informed decisions.1 Furthermore, we hope more informed decisions improve welfare. Economic studies offer encouragement. For example, Bloom et al. (2013) find expert management practices raise firm profits, and Bronnenberg et al. (2015) find informed shoppers are more likely to buy less expensive store brand versions of largely equivalent products. If expertise is good, and more is better, then groups of the most distinguished experts presumably make the best decisions. However, the Marquis de Condorcet famously discounted the necessity of expertise in a remarkable insight over two centuries ago. If enough marginally informed people decide an outcome by majority vote, the group will collectively arrive at the right decision (Condorcet 1785). Condorcet’s proposal has broad implications for society. It can motivate a diverse range of institutions, from democracy itself, to an expressive function of law (Dharmapala and McAdams 2003), to hierarchical decision making in firms (Katzner 1995). Because of its wide applicability, the Condorcet Jury theorem (CJT) continues to 1
Skill refinement is another form of expertise, but decisional ability is the focus here.
* Alexander Lundberg [email protected] 1
West Virginia University, Morgantown, USA
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draw interdisciplinary research attention. Economists, politicial scientists, and mathematicians in particular have devoted several decades to its delineation. In its classical version, the CJT presents a group facing a binary decision. Each member has a signal correlated with the better of the two options. As the group size grows, a majority vote identifies the better option with probability approaching one. The result hinges on the assumption of statistical independence. No signal provides information on any other. In practice, however, individuals can share common information, culture, ideology, etc. Such commonalities weaken the case for independence, but the CJT is robust to a variety of extensions. For example, as long as the average correlati
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