Collective decision-making by rational agents with differing preferences

Abstract

Collective decisions can emerge from individual-level interactions between members of a group. These interactions are often seen as social feedback rules, whereby individuals copy the decisions they observe others making, creating a coherent group decision. The benefit of these behavioral rules to the individual agent can be understood as a transfer of information, whereby a focal individual learns about the world by gaining access to the information possessed by others. Previous studies have analyzed this exchange of information by assuming that all agents share common goals. While differences in information and differences in preferences have often been conflated, little is known about how differences between agents’ underlying preferences affect the use and efficacy of social information. In this paper, I develop a model of social information use by rational agents with differing preferences, and demonstrate that the resulting collective behavior is strongly dependent on the structure of preference sharing within the group, as well as the quality of information in the environment. In particular, I show that strong social responses are expected by individuals that are habituated to noisy, uncertain environments where private information about the world is relatively weak. Furthermore, by investigating heterogeneous group structures, I demonstrate a potential influence of cryptic minority subgroups that may illuminate the empirical link between personality and leadership.