We consider a situation in which individuals search for accurate decisions without direct feedback on their accuracy, but with information about the decisions made by peers in their group. The “wisdom of crowds” hypothesis states that the average judgment of many individuals can give a good estimate of, for example, the outcomes of sporting events and the answers to trivia questions. Two conditions for the application of wisdom of crowds are that estimates should be independent and unbiased. Here, we study (...) how individuals integrate social information when answering trivia questions with answers that range between 0% and 100%. We find that, consistent with the wisdom of crowds hypothesis, average performance improves with group size. However, individuals show a consistent bias to produce estimates that are insufficiently extreme. We find that social information provides significant, albeit small, improvement to group performance. Outliers with answers far from the correct answer move toward the position of the group mean. Given that these outliers also tend to be nearer to 50% than do the answers of other group members, this move creates group polarization away from 50%. By looking at individual performance over different questions we find that some people are more likely to be affected by social influence than others. There is also evidence that people differ in their competence in answering questions, but lack of competence is not significantly correlated with willingness to change guesses. We develop a mathematical model based on these results that postulates a cognitive process in which people first decide whether to take into account peer guesses, and if so, to move in the direction of these guesses. The size of the move is proportional to the distance between their own guess and the average guess of the group. This model closely approximates the distribution of guess movements and shows how outlying incorrect opinions can be systematically removed from a group resulting, in some situations, in improved group performance. However, improvement is only predicted for cases in which the initial guesses of individuals in the group are biased. (shrink)

Increasing gender diversity in the boardroom has been promoted as a way to enhance corporate governance and risk management. This study empirically examines whether boards with more female directors play a role in reducing R&D risk. We first show that female directors help to reduce the positive relationship between R&D investment and future performance volatility. We then report that firms with more gender-diverse boards exhibit a lower adverse effect of R&D on the cost of debt. These results are robust to (...) endogeneity analysis, alternative measures of gender diversity and risky investment, and other sensitivity tests. Overall, our results suggest that female directors improve board effectiveness in risk management with respect to R&D investment. (shrink)

In recent years, epistemologists have devoted enormous attention to this question: what should happen when two epistemic peers disagree about the truth-value of some proposition? Some have argued that that in all such cases, both parties are rationally required to revise their position in some way. Others have maintained that, in at least some cases, neither party is rationally required to revise her position. In this paper, I examine a provocative and under-appreciated argument for the latter view due to Elgin (...) Disagreement, Oxford University Press, Oxford, pp 53–68, 2010; The Philosopher’s Magazine, fourth quarter, pp 77–82, 2012; True enough, MIT Press, Cambridge, 2017; in: Johnson Voicing dissent: the ethics and epistemology of making disagreement public, Routledge, New York, pp 10–21, 2018). I defend it against a series of objections, and I then identify some fruitful ways in which her view could be developed further. (shrink)