Too Good to Be True: Individual and Collective Decision-Making with Misleading Signals
The paper titled "Too Good to Be True: Individual and Collective Decision-Making with Misleading Signals" by Sebastian Fehrler, Anna Hochleitner and Moritz Janas has been published in Management Science.
Abstract
In many situations, an abundance of misleading evidence—such as fake customer reviews—can lead to false or deceptive conclusions. We experimentally investigate individual and collective decision-making in an information structure in which signals can be correlated, depending on the state of the world. In this setting, too much evidence pointing in one direction has the potential to mislead, necessitating a level of sophistication for rational decision-making. Overall, participants’ performance is poor with only small differences in collective and individual decision-making accuracy. Interestingly, the more complex environment tends to encourage greater honesty within heterogeneous groups than a benchmark setting with independent signals, thus corroborating a rather subtle game-theoretic prediction.