Social Influence Undermines the Wisdom of the Crowd in Sequential Decision Making

Teams, juries, electorates, and committees must often select from various alternative courses of action what they judge to be the best option. The phenomenon that central tendency many independent estimates is quite accurate—“the wisdom crowd”—suggests group decisions based on plurality voting can surprisingly wise. Recent experimental studies demonstrate crowd further enhanced if individuals have opportunity revise their votes in response others. We argue this positive effect social information turns negative members do not first contribute an vote but instead cast sequentially such early mistakes cascade across strings decision makers. Results a laboratory experiment confirm when subjects state which two answers deem correct, majorities are more wrong see how been chosen by previous than cannot. As predicted our theoretical model, happens even though subjects’ use improves accuracy individual votes. A second conducted over internet involving larger groups indicates although easy tasks eventually corrected long enough choice sequences, for difficult perpetuate themselves, showing no self-correct. This paper was accepted Yuval Rottenstreich, analysis.