Leadership in Groups: A Monetary Policy Experiment

In an earlier paper (Blinder and Morgan, 2005), we created an experimental apparatus in which Princeton University students acted as ersatz central bankers, making monetary policy decisions both as individuals and in groups. In this study, we manipulate the size and leadership structure of monetary policy decisionmaking. We find no evidence of superior performance by groups that have designated leaders. Groups without such leaders do as well as or better than groups with well-defined leaders. Furthermore, we find rather little difference between the performance of four-person and eight-person groups; the larger groups outperform the smaller groups by a very small margin. Finally, we successfully replicate our Princeton results, at least qualitatively: Groups perform better than individuals, and they do not require more "time" to do so.