Research Seminar

Correlation Neglect in Belief Formation: Team versus Individual Decision-Making – Sofia Monteiro

19 Sep 2023

24105 Kiel
Kiel Institut für Weltwirtschaft, Kiellinie 66


Sofia Monteiro (Kiel Institute)


Recent research explores how individual beliefs respond to information sources that are correlated with each other rather than independent signals. Correlated signals characterise much of the information we process quickly on a daily basis, and the resulting biased beliefs can be costly. We show that team decision-making ameliorates this bias, generating more rational beliefs in a setting where individuals tend to exhibit substantial correlation neglect. In a 2x2 between-subjects design, participants are randomly assigned to either INDIVIDUAL treatment, with Uncorrelated or Correlated information structures and individual beliefs, or TEAM treatment, with Uncorrelated or Correlated information structures and team beliefs. Randomly paired teams of two use a chat box to reach an agreement. To account for the heterogeneity within teams, we add a single incentivised belief-formation task as a proxy for the naïveté of individual members. Pairs with at least one rational member form significantly more rational beliefs than teams with two naïve members and individuals working alone. Just having one rational team member is sufficient to shift beliefs. In the chat data, teams with at least one rational member shared more communications coded as computational logic and fewer proposals outside the rational interval.


Sofia Monteiro (Kiel Institute) – Matthias Praxmarer –   Matthias Sutter (Max Planck Institute for Research on Collective Goods, University of Cologne, University of Innsbruck)


Lecture Hall (A-032)