Information Cascades

Suppose you’re working at a company, and your boss asks you to explain what went

wrong in a recent hiring decision. The company decided to interview two candidates

for a single job. Let’s call the two candidates A and B. A hiring committee was formed

to attend the interviews and decide which of the two candidates to hire. Everyone on

the committee was interested in making the best possible hire, but after the interview

it was clear that members of the committee had different ideas about which of the two

candidates was the best choice. When the committee met to make the final decision

they decided to go around the room and ask each person on the committee to announce

which of the two candidates they believed to be the best choice for the company. In

fact, everyone on the committee said that candidate A seemed to be the best choice,

so the offer was made immediately to candidate A without additional discussion.

Now that candidate A has worked for the firm for a while it is clear that candidate B

would have been a better choice.

(a) Your boss has asked you to explain how the committee members could have

unanimously supported candidate A when she was reasonably certain that before

the committee meeting at least some of the members of the committee thought

that B was probably the best choice. What can you tell her?

(b) Can you suggest another procedure that the committee could have used that would

have revealed the initially differing opinions about the candidates and which might

have resulted in the actually better choice of candidate B?

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