When to break from the herd to make a better decision

Date:
September 29, 2021
Source:
Ohio State University
Summary:
People learn valuable information from how long others hesitate
before making their decisions, a new study suggests.



FULL STORY ========================================================================== People learn valuable information from how long others hesitate before
making their decisions, a new study suggests.


========================================================================== Researchers found that when people saw others in their group hesitating
before making a choice, they were about twice as likely to break from
the group and make a different choice.

"When we see other people hesitate before making a choice, that tells
us they were conflicted, that they weren't entirely sure they were
making the right decision," said Ian Krajbich, co-author of the study
and professor of psychology and economics at The Ohio State University.

"That makes people less confident in the group consensus and frees them
to make decisions based on their own information. That can help groups
to escape bad outcomes." Krajbich conducted the research with Cary
Frydman, associate professor of finance and business economics at the University of Southern California Marshall School of Business. Their
study was published this week in the journal Management Science.

The findings have implications for group behavior in politics, finance,
fashion -- any situation where there might be herd behavior, Krajbich
said.



========================================================================== "Even if it appears at first that everyone is following the same trend, hesitation may reveal that they are not all on the same page," he said.

"If people start to notice that others are hesitating before joining the
herd, that can stall the momentum or shift it entirely." For example,
think about a political campaign in which a candidate is seeking
endorsements from popular politicians. Slow endorsements that come late
in a campaign could indicate weak support and are less convincing than endorsements that come earlier in a campaign, Krajbich said.

The study involved 72 college students. They participated in groups
of eight.

In each of 30 rounds, the eight participants were given identical virtual
bags containing three balls, each marked either "A" or "B" (the study was conducted on computers). One at a time, each participant pulled one ball,
saw which letter was on it, and then guessed which letter appeared most frequently in the bag.



==========================================================================
For example, imagine that the first group member pulled out a ball that
was marked A. It would make sense for that person to guess that the bag contained more A balls.

Each person following could see what the previous participants guessed --
but not what letters were on those earlier balls.

That left some participants later in the chain with a dilemma, Krajbich
said.

Say you were fourth in line and you pulled an A ball. That would suggest
there are more A balls in the bag. But you see the previous three people guessed B.

You have to decide whether to go with your information that suggests
guessing A, or to go with the herd and guess B.

That's where hesitation comes in, Krajbich said. If you see that the
previous person in the chain waited awhile before choosing B, that may
be an important signal.

That previous person may have also pulled an A ball, like you did,
and hesitated before choosing B with the herd. In that case, choosing
A might actually make sense for you.

That's exactly how many participants interpreted situations where
their information conflicted with the group, Krajbich said. When their predecessor responded slowly, participants chose against the herd about
66% of the time, compared to only 33% of the time when their predecessor
chose quickly.

In cases where the group was making the wrong decision, this often led
people to break from the herd and make the correct choice, he said.

"A couple of bad decisions at the beginning can lead everyone
astray. That's the herd behavior," Krajbich said.

"But what we found is that if people can see the hesitation in others'
choices, that can help them break the chain and change the course of
the group." The same phenomenon can work the opposite way, too. Fast
decisions by others can reinforce one's own information. For example, if
a person sees their friends quickly choose to get a vaccine for COVID-19,
that may make them more comfortable making the same choice, Krajbich said.

If friends hesitate before getting a vaccine -- even if they eventually
get one -- that may make a person less sure about whether to get the shot,
he said.

Krajbich said the findings in this study aren't necessarily a universal
rule.

There may be some decisions for which taking longer to choose could
indicate a more thoughtful choice.

"It will be important to figure out when fast decisions signal confidence
or when instead they signal thoughtlessness," he said.

========================================================================== Story Source: Materials provided by Ohio_State_University. Original
written by Jeff Grabmeier. Note: Content may be edited for style and
length.


========================================================================== Journal Reference:
1. Cary Frydman, Ian Krajbich. Using Response Times to Infer Others'
Private
Information: An Application to Information Cascades. Management
Science, 2021; DOI: 10.1287/mnsc.2021.3994 ==========================================================================

Link to news story: https://www.sciencedaily.com/releases/2021/09/210929101838.htm

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