By Clare Lombardelli and James Talbot of the Bank's Monetary Assessment and Strategy Division and James Proudman of the Bank's Conjunctural Assessment and Projections Division.
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.
Committees versus individuals: an experimental analysis of monetary policy decision-making