1. Prospects

If deliberation is helpful within institutions, we can imagine three principal reasons:

• • The best solution wins: groups are equivalent to their best members. One or more group members will often know the right answer, and other members might become convinced of this fact. For this reason, groups might perform toward or at the level of their best members. If some or many members suffer from ignorance or from a form of bias that leads to error, others might correct them. Deliberation might correct individual errors rather than propagate them, in a way that allows convergence on the judgment of the most accurate group member. Imagine, for example, that 10 people are trying to make some prediction about the future, and that one of the 10 is both an expert and a superb prognosticator. Perhaps the other group members will quickly see that they have an expert in their midst, and they will follow his lead. Consider ‘eureka’ problems, in which the right answer, once announced, is clear to all. For such problems, groups should be expected to converge on the answer as announced by the member who actually knows it.

  Institutions with many members may do especially well on this count; the Internet provides many examples of ingenious ‘crowd-sourcing mechanisms’ that select the best solutions from large samples of ‘solvers’. A good example is provided by problem-solving tournaments and bounty pay-for-solutions services, like the Netflix Prize (http://www.netflixprize.com/) and the iCisco innovation tournament (Terwiesch and Ulrich, Reference Terwiesch and Ulrich2009). A monetary incentive or prize structure is proposed and free-lance ‘solvers’ are invited to compete to produce the best solution or to exceed a criterion of achievement. These methods are revolutionizing the innovation process in many already productive firms and institutions.

• • The whole is the sum of the parts: aggregating information. Deliberation could help to aggregate existing information in a way that leads the institution as a whole to know more than any individual does. Suppose that the institution contains no global experts on the question at issue, and that relevant information is dispersed among members so that the overarching institution is potentially expert even if none of its individual members is not. Or suppose that the institution contains a number of experts, but that each member is puzzled about how to solve a particular problem. Deliberation might elicit the relevant information and allow the institution to make a sensible judgment. In this process, the whole is equal to the sum of the parts – the sum of the parts is what is sought – and no individual has all the parts. When a group is trying to solve a crossword puzzle, something of this kind often occurs, as different group members contribute what they know.

  Of course a standard justification of markets, elaborated by Hayek, is that they do exceptionally well in aggregating diverse information, and hence ‘know’ far more than the individuals who participate in them. If markets perform better than even expert and well-motivated planners, their ability to aggregate information is an important reason. At the same time, there seem to be many information-pooling problems that are likely to exceed market capacities. And much remains unknown about the information-pooling properties of different market mechanisms. Obviously, a pari-mutuel betting market disincentivizes information-pooling, while double-auction markets (like most stock exchanges) promote sharing information, at least biased pooling to drive up the prices of options in which a person has invested.

• • The whole goes beyond the sum of the parts: synergy. The give and take of group discussion might sift information and perspectives in a way that leads the institution to a good solution to a problem, one in which the whole is actually more than the sum of its parts. In such cases, deliberation is, at the very least, an ambitious form of information aggregation, one in which the exchange of views leads to a creative answer or solution. If an institution is seeking to improve the design of an automobile, a tennis racquet, or cell phone – or the right response to a threat to national security – the exchange of ideas might well produce creative solutions that go far beyond any simple aggregation of what group members thought before they started to talk. These processes are exemplified by successful brainstorming and innovation methods used by design teams at firms like IDEO. Large aggregations, again including efforts to obtain dispersed information through the Internet, also hold out considerable promise in this regard.

To what extent do these mechanisms work in practice? Two points are entirely clear. First, group members tend to become far more confident of their judgments after they speak with one another (Heath and Gonzalez, Reference Heath and Gonzalez1995). A significant effect of group interactions is a greater sense that one's postdeliberation conclusion is correct – whether it actually is or not. Corroboration by others increases confidence in one's judgments (Baron et al., Reference Baron, Hoppe, Kao, Brunsman, Linneweh and Rogers1996). Second, deliberation usually reduces variance within groups (although remember that deliberation can increase variance between groups though polarization and related effects). After talking together, group members tend to come into accord with one another.

It follows that members of deliberating institutions will usually converge on a position on which members have a great deal of confidence. This is productive if that position is also likely to be correct – but if it is not, then many group members will end up sharing a view in which they firmly believe, but which turns out to be wrong (a most unfortunate and sometimes quite destructive situation). While the relevant studies typically involve members of small groups, there is every reason to believe that the two findings would hold within larger institutions, at least if their decisions are a product of some form of deliberation.

Unfortunately, there is no systematic evidence that deliberating groups or institutions will usually succeed in aggregating the information held by their members. With respect to questions with definite answers, deliberating groups tend to do about as well as or slightly better than their average members, but not as well as their best members (Gigone and Hastie, Reference Gigone and Hastie1997). Hence, it is false to say that group members usually end up deferring to their internal experts. Truth does not always win out; the most that can be said is that under some conditions, the group will converge on the truth if the truth begins with ‘at least some initial support’ within the group when the task has ‘a demonstrably correct answer’ (MacCoun, Reference MacCoun, Gowda and Fox2002: 116, 121) (Recall the potential for group success with a eureka problem.) Note here that when a group outperforms most of its individual members, it is generally because the issue is one on which a particular answer can be shown, to the satisfaction of all or most, to be right; and that even in that condition, the group might not do well if the demonstrably correct solution lacks significant support at the outset.

In general, simple majority schemes do fairly well at predicting group judgments for many decision tasks. More generally, depending on the task, the appropriate statistical measure of the central predeliberation tendency – mean, median, or mode – is a good description of the group's integration process. It follows that if the majority is wrong, the group will be wrong as well (MacCoun, Reference MacCoun, Gowda and Fox2002). In this respect, there is a risk that institutions will not do better than their individual members, and that micro errors will produce macro errors as well. With experts, the same general conclusion holds. Thus a ‘structured approach for combining independent forecasts is invariably more accurate’ than ‘traditional group meetings’, which do ‘not use information efficiently’ (Armstrong, Reference Armstrong and Armstrong2001: 433). There is a lesson here for the operation of large institutions, including businesses and government bodies.

2. Two sources of self-silencing

There are two reasons why exposure to the views of others might lead people not to share what they know. The first involves the information conveyed by what other people say and do. If most group members believe that X is true, there is reason to believe that X is in fact true, and that reason might seem to outweigh the purely private reason a particular group member has to believe that X is false. If other group members share a particular belief, isolated or minority members might not speak out, deferring to the informational signal given by the statements of others. In a business or law firm, for example, members’ optimism about the likely success of some plan or option might lead skeptics to silence themselves on the ground that their own judgments must be ill-informed of wrong. Large institutions, including nations, might be vulnerable in this way.

Not surprisingly, the strength of the informational signal will depend on the number and nature of the people who are giving it. If the group contains one or more people who are well-known to be authorities or who otherwise command respect, then other group members are likely to silence themselves out of deference to them. People are particularly averse to being sole dissenters. If all but one person in a deliberating group has said that X is true, then the remaining member is likely to agree X is true, even to the point of ignoring the evidence of his own senses. An evident danger here is that groups will be deprived of important information.

The second reason for self-silencing involves social influences. Their silence might stem not from a belief that they are wrong, as in the case of informational pressure, but instead from the risk of social sanctions of various sorts. Even in societies and organizations that are strongly committed to freedom, those who defy the dominant position within the group might incur a form of disapproval that will lead them to be less trusted, liked, and respected in the future. Here, too, people are inevitably affected by the number and nature of those with the majority position. A large majority will impose more social pressure than a small one. And if certain group members are leaders or authorities willing and able to impose social sanctions of various sorts, others will be unlikely to defy them publicly.

In public institutions, especially but not only in authoritarian nations, there is a risk that the problem of self-silencing can be especially serious. If officials do not tell other officials what they know, leaders may not end up with the information that they need in order to decide well. One of the advantages of markets, in this regard, is that those with private information are free and incentivized to choose in a way that reflects what they know. Self-silencing is unlikely to be problem when people are making investment decisions, in which self-interest strongly inclines people to act on the basis of the information that they have.

Both informational pressure and social influences help to explain the finding that in a deliberating group, those in a minority position often silence themselves or otherwise have disproportionately little weight. There is a more particular finding: Members of low-status groups – less-educated people, African-Americans, sometimes women – speak less and carry less influence within deliberating groups than their higher-status peers (Christenson and Abbott, Reference Christenson, Abbott, Chapman and Sonnenberg2000). Both informational influence and social pressures, likely to be especially strong for low-status members, contribute to this result. The unfortunate consequence can be a loss of information to the group as a whole, in a way that ensures that deliberating groups do far less well than they would if only they could aggregate the information held by group members. Of course this can be a problem for large institutions as well as small groups. Consider the finding that one of the most common defensive tactics for small coalition or solo hold-out jurors is to refuse to discuss the case further with other jurors (Hastie et al., Reference Hastie, Grofman and Owen2000).

Let us now turn to the four sets of deliberative failures.

3. Deliberative failure 1: amplification of cognitive errors

It is well known that individuals do not always process information well. They use heuristics that lead them to predictable errors; they are subject to identifiable biases, which also produce errors (Gilovich et al., Reference Gilovich, Griffin and Kahneman2002). In putting a spotlight on these biases, we mean to point to some of the micro foundations of macro errors. The point is analogous to that made by Schelling (Reference Schelling2006) and his followers (Watts, Reference Watts2011), who emphasize how individually rational decisions can produce surprises and mistakes. What we mean to add is that institutions and groups may not correct bounded rationality at the individual level (Shiller, Reference Shiller2006). As we shall see, there are important interactions between the work of Schelling and his followers and various findings about departures from rationality (Watts, Reference Watts2011).

For example, people err because they use the availability heuristic to answer difficult questions about probability. How likely is a terrorist attack, a hurricane, a traffic jam, an accident from a nuclear power plant, a case of venereal disease? When people use the availability heuristic, they answer a question of probability by asking whether examples come readily to mind (Tversky and Kahneman, Reference Tversky and Kahneman1973). The point bears on private and public responses to risks suggesting, for example, that people will be especially responsive to the dangers of AIDS, crime, earthquakes, and nuclear power plant accidents if examples are easy to recall. The point also explains some of the sources of discrimination on the basis of race, sex, age, and disability. If it is easy to bring to mind cases in which a female employee quit work to care for her family, sex discrimination is more likely; so too if it is easy to think of cases in which African-American employees performed poorly.

In this way, familiarity can affect the availability of instances. But salience is important as well. A terrorist attack on television will be highly salient to viewers, and will have a greater impact than a report about the attack in the newspaper (Slovic, Reference Slovic2000). Similarly, earlier events will have a smaller impact than later ones. The point helps to explain both private and institutional behavior. For example, whether people will buy insurance for natural disasters is greatly affected by recent experiences (Slovic, Reference Slovic2000). In the aftermath of an earthquake, people become far readier to buy insurance for earthquakes – but their readiness to do so declines steadily from that point, as vivid memories fade. Use of the availability heuristic is not irrational, but it can easily lead to serious errors of fact. After the 2005 disaster produced by hurricane Katrina in the United States, it was predictable that significant steps would be taken to prepare for hurricanes – and also not unpredictable that before that disaster, such steps would be quite inadequate. Here, then, we can see that the availability heuristic operates at the level of large institutions. In deciding whether to take steps to combat a potentially serious national problem, the availability heuristic may have a significant impact.

Most people also follow the representativeness heuristic, in accordance with which judgments of probability are influenced by assessments of similarity (the extent to which A ‘looks like’ B) (Tversky and Kahneman, Reference Tversky, Kahneman, Kahneman, Slovic and Tversky1982). The representativeness heuristic helps explain what Paul Rozin and Carol Nemeroff have called ‘sympathetic magical thinking’, including the beliefs that some objects have contagious properties, and that causes resemble their effects (Rozin and Nemeroff, Reference Rozin, Nemeroff, Gilovich, Griffin and Kahneman2002). The representativeness and availability heuristics often work well, but they are certainly not optimal and they can lead to severe blunders.

For purposes of assessing deliberation, a central question is whether groups avoid the errors of the individuals who compose them. There is no clear evidence that they do, and often they do not – a vivid illustration of the principle, ‘garbage in, garbage out’, in a way that mocks the aspiration to collective or institutional correction of individual blunders. In fact, individual errors are not merely replicated but actually amplified in many group or institutional decisions – a process of ‘some garbage in, much garbage out’. We can see this problem in multiple domains.

Consider some key findings. If individual jurors are biased because of pretrial publicity that misleadingly implicates the defendant, or even because of the defendant's unappealing physical appearance, juries are likely to amplify rather than correct those biases (MacCoun, Reference MacCoun, Gowda and Fox2002). Groups have been found to amplify reliance on the representativeness heuristic (Stasson et al., Reference Stasson, Ono, Zimmerman and Davis1988); to exhibit even larger framing effects than individuals (Kerr et al., Reference Kerr, MacCoun and Kramer1996); to show more overconfidence than group members (Sniezek and Henry, Reference Sniezek and Henry1989) (Johnson, Reference Johnson2009); to be more affected by the biasing effect of spurious arguments from lawyers (Schumann and Thompson, Reference Schumann and Thompson1989); to be more susceptible to the ‘sunk cost fallacy’ (Whyte, Reference Whyte1993); and to produce more preference reversals in choice (Irwin and Davis, Reference Irwin and Davis1995; Mowen and Gentry, Reference Mowen and Gentry1980). In an especially revealing finding, groups have been found to make more, rather than fewer, conjunction errors than individuals when individual error rates are high – though fewer when individual error rates are low (Whyte, Reference Whyte1986). In addition, and importantly, groups demonstrate essentially the same level of reliance on the availability heuristic, even when use of that heuristic leads to clear errors (Stasson et al., Reference Stasson, Ono, Zimmerman and Davis1988) – a point that has implications for markets (Shiller, Reference Shiller2006).

Here is an especially disturbing finding, one with great relevance to group behavior in both business and politics: Groups are more likely than individuals to escalate their commitment to a course of action that is failing, and even more so, if members identify strongly with the groups to which they belong (Stasser and Dietz-Uhler, Reference Stasser and Dietz-Uhler2001). There is a clue here about why companies, states, and even nations often continue with projects and plans that are clearly going awry. If a company is marketing a product that is selling poorly, it may well continue on its misguided course simply because of group dynamics. (Enron is an obvious example.) So too with a nation whose economic policy, or approach to foreign affairs, is hurting its citizens.

Why are individual cognitive errors so often amplified at level of groups and institutions? Informational pressures and social influences are unquestionably at work. Suppose that most members of a group are prone to make certain errors. If the majority makes those errors, then most people will see others making the same errors. What they see will convey information about what is right or proper. Those who are not specialists are likely to think: If most people make the same errors, maybe they are not errors at all. Social influences also play a role. If most group members make errors, others also might make them simply in order not to seem disagreeable or foolish. When groups do not correct the blunders of their members, these factors are part of the explanation.

To be sure, deliberating groups can attenuate certain biases, and this evidence suggests circumstances in which well-designed institutions can perform well. We have seen that for eureka problems, groups often find the right answer, even if most individual members begin with a biased answer. Groups are also likely to do better than the average individual when members are subject to ‘egocentric bias’ – the bias that leads most of us to think that other people think and act as we do. Most people believe that their tastes and preferences are typical. When asked what percentage of other people watch television on Saturday night, enjoy Frank Sinatra, favor a particular political party, or believe that the latest Brad Pitt movie will win the Oscar, most of us show a bias for the answer that we ourselves favor. But in groups with diverse views, people quickly learn that their own position is not universally held, and hence the bias is reduced. In these cases, group deliberation supplies an important corrective.

Or consider the hindsight bias – people's tendency to believe, falsely but with the benefit of hindsight, that they would have accurately predicted the outcome of an event (a political election, a natural disaster, an illness, a change in the stock market). Compared to individuals, groups are less susceptible to hindsight bias (Stahlberg et al., Reference Stahlberg, Eller, Maass and Frey1995). Apparently group members who are less susceptible to that bias are able to persuade others that it is indeed a bias. It is possible that large institutions, assessing past events, will be less likely to fall prey to hindsight bias.

But the broader point is that with group discussion, individual errors are often propagated rather than eliminated, and amplification of those errors is quite likely. When individuals show a high degree of bias, groups are likely to be more biased, not less biased, than their median or average member.

4. Deliberative failure 2: cascades

A cascade is a process by which people influence one another, so much so that participants ignore their private knowledge and rely instead on the publicly stated judgments of others. There are two kinds of cascades: informational and reputational. In informational cascades, people silence themselves out of deference to the information conveyed by others. In reputational cascades, they silence themselves so as to avoid the opprobrium of others. Both of these processes affect private and public institutions.

5. Deliberative failure 3: group polarization

There are clear links between social cascades and the well-established phenomenon of group polarization, by which members of a deliberating group end up adopting a more extreme version of the position toward which they tended before deliberation began (Brown, Reference Brown1986). The problem is especially severe for groups of like-minded people, who typically end up in more extreme positions as a result of deliberation. And while most of the relevant studies involve small groups, there is no question that group polarization occurs within large institutions.

Group polarization is the typical pattern with deliberating groups, and it has been found in hundreds of studies involving more than a dozen countries, including the United States, France, Afghanistan, and Germany (Brown, Reference Brown1986). For example, those who disapprove of the United States and are suspicious of its intentions will increase their disapproval and suspicion if they exchange points of view. Indeed, there is specific evidence of the latter phenomenon among citizens of France (Brown, Reference Brown1986).

The original psychological experiments on the effects of deliberation are relevant to businesses and governments alike. They involved risk-taking behavior, with a demonstration that risk-inclined people become still more risk-inclined after they deliberate with one another (Brown, Reference Brown1986). Risky decisions include taking a new job, investing in a foreign country, escaping from a prisoner-of-war camp, or running for political office. With respect to many such decisions, members of deliberating groups became significantly more risk-inclined after a brief period of collective discussion. On the basis of this evidence, it became standard to believe that deliberation produced a systematic ‘risky shift’.

Later studies threw this conclusion into serious question. On many of the same questions on which Americans displayed a risky shift, Taiwanese subjects showed a ‘cautious shift’. Deliberation led citizens of Taiwan to become significantly less risk-inclined than they were before they started to talk. Among American subjects, deliberation sometimes produced a cautious shift as well, as risk-averse people became more averse to certain risks after they talked with one another. The principal examples of cautious shifts involved the decision whether to marry and the decision whether to board a plane despite severe abdominal pain, possibly requiring medical attention. In these cases, the members of deliberating groups shifted not toward risk but toward greater caution (Moscovici and Zavalloni, Reference Moscovici and Zavalloni1969).

A straightforward interpretation turned out to be able to reconcile these competing findings: the predeliberation median is the best predictor of the direction of the shift (Brown, Reference Brown1986). When more than half of group members are disposed toward risk-taking, a risky shift is observed. Where members are disposed toward caution, a cautious shift is observed. Thus, for example, the striking difference between American and Taiwanese subjects is a product of a difference in the predeliberation medians of the different groups on the relevant questions. Thus the risky shift and the cautious shift are both subsumed under the rubric of group polarization.

Group polarization occurs for matters of fact as well as issues of value, though it is easier to demonstrate the latter. If the question is whether a terrorist attack will occur in the United States in the next year, group polarization will not be easy to test, simply because the answer is either yes or no, and it is not easy to demonstrate greater extremism in binary choices. But suppose that people are asked, on a bounded scale of zero to eight, how likely it is that a terrorist attack will occur in the United States in the next year, with zero indicating ‘zero probability’, eight indicating ‘absolutely certain’, seven indicating ‘overwhelmingly likely’, six ‘more probable than not’, and five ‘fifty-fifty’. In that event, the answers from a deliberating group will tend to reveal group polarization, as people move toward more extreme points on the scale depending on their initial median point. If the predeliberation median is five, the group judgment will usually be six; if the predeliberation median is three, the group judgment will usually be two (Brown, Reference Brown1986).

Note here that in the United States, an important institution has been found to be vulnerable to group polarization. Federal judges are highly susceptible to such polarization, as both Democratic and Republican appointees show far more ideological voting patterns when sitting with other judges appointed by a President of the same political party (Sunstein, Reference Sunstein2006). Juries polarize as well (Schkade et al., Reference Schkade, Sunstein and Kahneman2000).

Why does group polarization occur? There are three reasons (Brown, Reference Brown1986; Glaeser and Sunstein, Reference Glaeser and Sunstein2009). The first and most important involves the now-familiar idea of informational influence, but in a distinctive form. People respond to the arguments made by other people – and the ‘argument pool’ in any group with some predisposition in one direction will inevitably be skewed toward that predisposition. As a statistical matter, the arguments favoring the initial position will be more numerous than those pointing in the other direction and even old arguments, when repeated, increase belief in what is asserted (Dechêne et al., Reference Dechêne, Stahl, Hansen and Wänke2010). Individuals will have heard of some, but not all, of the arguments that emerge from group deliberation. As a result of the relevant arguments, deliberation will lead people toward a more extreme point in line with what group members initially believed. This problem can of course occur within large institutions as well as small groups.

The second explanation is reputational and involves social influences. People want to be perceived favorably by other group members. Sometimes people's publicly stated views are, to a greater or lesser extent, a function of how they want to present themselves. Once they hear what others believe, some will adjust their positions at least slightly in the direction of the dominant position, slightly because they want to preserve their self-presentation. But they shift accordingly (Brown, Reference Brown1986).Footnote ¹

The third explanation of group polarization stresses the close links among confidence, extremism, and corroboration by others (Baron et al., Reference Baron, Hoppe, Kao, Brunsman, Linneweh and Rogers1996). As people gain confidence, they usually become more extreme in their beliefs. Agreement from others tends to increase confidence, and for this reason like-minded people, having deliberated with one another, become more sure that they are right and thus more extreme. In many contexts, people's opinions become more extreme simply because their views have been corroborated, and because they become more confident after learning that others share their views (Baron et al., Reference Baron, Hoppe, Kao, Brunsman, Linneweh and Rogers1996). Many minds can badly blunder in this way, including the many minds who play a role in political choices.

Does group polarization lead to accurate or inaccurate answers? Do institutions err when they polarize? No general answer would make sense. Everything depends on the relationship between the correct answer and the institution's predeliberation tendencies. If the institution is leaning toward the right answer, polarization might lead its members directly to the truth. It follows that group polarization might not produce errors or failures at all. But there are no guarantees here. As a result of the relevant influences, some people will fail to disclose what they know. When individuals are leaning in a direction that is mistaken, the mistake will be amplified by group deliberation. We have already encountered an example: When most people are prone to make logical errors, group processes lead to more errors rather than fewer. This is polarization in action, and it produces large blunders, including by large institutions.

6. Deliberative failure 4: over-weighting common knowledge

The last failure is in many respects the most interesting. Suppose that people within an institution have a great deal of information – enough to produce the unambiguously right outcome if that information is properly aggregated. Even if this is so, an obvious problem is that institutions will not perform well if they focus on shared information and neglect information that is held by one or a few people. Unfortunately, countless studies demonstrate that this regrettable result is highly likely (Stasser and Titus, Reference Stasser and Titus2003).

‘Hidden profiles’ is the term for accurate understandings that groups could but do not obtain. Hidden profiles are, in turn, a product of the common-knowledge effect, through which information held by all group members has more influence on group judgments than information held by only a few members (Gigone and Hastie, Reference Gigone and Hastie1993; Stasser and Titus, Reference Stasser and Titus2003). The most obvious explanation of the effect is the simple fact that as a statistical matter, common knowledge is more likely to be communicated to the group; but social influences play a role as well.