 Sequential decision-making with group identityJessica Van Parys and Elliott Ash Journal of Economic Psychology, 2018, vol. 69, issue C, 1-18 Abstract: In sequential decision-making experiments, participants often conform to the decisions of others rather than reveal private information – resulting in less information produced and potentially lower payoffs for the group. This paper asks whether experimentally induced group identity affects players’ decisions to conform, even when payoffs are only a function of individual actions. As motivation for the experiment, we show that U.S. Supreme Court Justices in preliminary hearings are more likely to conform to their same-party predecessors when the share of predecessors from their party is high. Lab players, in turn, are more likely to conform to the decisions of in-group members when their share of in-group predecessors is high. We find that exposure to information from in-group members increases the probability of reverse information cascades (herding on the wrong choice), reducing average payoffs. Therefore, alternating decision-making across members of different groups may improve welfare in sequential decision-making contexts. Keywords: Social identity; Information cascades; Herd behavior (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:69:y:2018:i:c:p:1-18 DOI: 10.1016/j.joep.2018.09.004 Access Statistics for this article Journal of Economic Psychology is currently edited by G. Antonides and D. Read More articles in Journal of Economic Psychology from Elsevier |
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