Selective Information Sharing and Group Delusion (with Anton Suvorov, Jeroen van de Ven)

Although they usually manage to combine information to make well-informed decisions, groups also make mistakes. We investigate experimentally one source of sub-optimal decision-making by groups: the selective and asymmetric sharing ofego-relevant information within teams. We show that good news about one’s performance is shared more often with team members than bad news. Asymmetric information sharing combined with the receivers’ selection neglect boosts team confidence compared to an unbiased exchange of feedback. Consequently, weaker teams make worse investment decisions in bets whose success depends on the team’s ability. The endogenous social exchange of ego-relevant information may foster detrimental group delusion.