The Quality of Stakeholder-Based Decisions: Lessons from the Case Study Record

The increased use of stakeholder processes in environmental decisionmaking has raised concerns that the inherently “political” nature of such processes may sacrifice substantive quality for political expediency. In particular, there is concern that good science will not be used adequately in stakeholder processes nor be reflected in their decision outcomes. This paper looks to the case study record to examine the quality of the outcomes of stakeholder efforts and the scientific and technical resources stakeholders use. The data for the analysis come from a “case survey,” in which researchers coded information on over 100 attributes of 239 published case studies of stakeholder involvement in environmental decisionmaking. These cases reflect a diversity of planning, management, and implementation activities carried out by environmental and natural resource agencies at many levels of government. Overall, the case study record suggests that there should be little concern that stakeholder processes are resulting in low quality decisions. The majority of cases contained evidence of stakeholders improving decisions over the status quo; adding new information, ideas, and analysis; and having adequate access to technical and scientific resources. Processes that stressed consensus scored higher on substantive quality measures than those that did not. Indeed, the data suggested interesting relationships between the more “political” aspects of stakeholder decisionmaking, such as consensus building, and the quality of decisions.

Quantifying the effects of social influence

How do humans respond to indirect social influence when making decisions? We analysed an experiment where subjects had to repeatedly guess the correct answer to factual questions, while having only aggregated information about the answers of others. While the response of humans to aggregated information is a widely observed phenomenon, it has not been investigated quantitatively, in a controlled setting. We found that the adjustment of individual guesses depends linearly on the distance to the mean of all guesses. This is a remarkable, and yet surprisingly simple, statistical regularity. It holds across all questions analysed, even though the correct answers differ in several orders of magnitude. Our finding supports the assumption that individual diversity does not affect the response to indirect social influence. It also complements previous results on the nonlinear response in information-rich scenarios. We argue that the nature of the response to social influence crucially changes with the level of information aggregation. This insight contributes to the empirical foundation of models for collective decisions under social influence.Comment: 3 figure

Social Influence in Stockmarkets: A Conceptual Analysis of Social Influence Processes in Stock Markets

This paper focuses on the role of social factors for booms-bubbles-busts cycles in stock markets. It is argued that indirect and direct social influences are important contributors by reinforcing stock investors’ cognitive biases exaggerated by affective influences. A review of herding research primarily undertaken by financial economists is followed by a demonstration that psychological theories of direct social influence (imitation) have bearings on the understanding of the herding phenomenon in stock markets. How to continue this research with relevance for regulations of stock markets is discussed.Social influence; stock investments; conceptual analysis

Behind closed doors: Revealing the ECB’s Decision Rule

This paper aims at discovering the decision rule the Governing Council of the ECB uses to set interest rates. We construct a Taylor rule for each member of the council and for the euro area as a whole, and aggregate the interest rates they produce using several classes of decision-making mechanisms: chairman dominance, bargaining, consensus, voting, and voting with a chairman. We test alternative scenarios in which individual members of the council pursue either a national or a federal objective. We then compare the interest-rate path predicted by each scenario with the observed euro area’s interest rate. We find that scenarios in which all members of the Governing Council are assumed to pursue Euro-area-wide objectives are dominated by scenarios in which decisions are made collectively by a council consisting of members pursuing national objectives. The best-performing scenario is the one in which individual members of the Governing Council follow national objectives, bargain over the interest rate, and their weights are based on their country’s share of the zone’s GDP.European Central Bank, Monetary Policy Committee, Decision rules