Too Good to Be True – Individual and Collective Decision-Making with Misleading Signals
A new article in Management Science examines how individuals and groups make decisions in environments shaped by misleading information.
In “Too Good to Be True – Individual and Collective Decision-Making with Misleading Signals” Sebastian Fehrler, Anna Hochleitner, and Moritz Janas experimentally investigate decision-making in situations where signals are correlated and potentially deceptive. In these settings, an abundance of evidence pointing in one direction can be misleading, in fact rendering it less likely to be true, substantially complicating rational decision-making.
The authors compare individual and collective decision-making under these conditions and find that overall performance is poor, with only small differences in accuracy between individuals and groups. At the same time, the more complex information environment tends to encourage greater honesty within heterogeneous groups compared to settings with independent signals.
Taken together, the study offers new insight into how people evaluate information, navigate uncertainty, and make decisions when evidence may be misleading.