Communication and Decisions

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This award funds research in economic theory that develops new models of how communication affects economic decisions in three different contexts.The first project builds and analyzes a model of group decision making. The goal is to predict the specific circumstances that lead groups to behave in a polarized manner. Research in sociology and organizational behavior has provided strong empirical evidence for polarization; groups tend to make more extreme decisions than an individual group member would make on his or her own. The goal is to predict the specific circumstances that lead to polarization even when each group member is acting in a rational way.The second project develops a general approach to communication in games of asymmetric information, especially signaling games. This research provides a unifying framework that incorporates a wide range of Nash equilibrium refinements.The third project starts with another documented empirical result: economic decision makers are frequently more honest than would be predicted by the standard rational actor model. This project develops a new model in which individuals behave honestly as a way to signal.This research brings insights from psychology and sociology into the formal modeling framework used by economists. The project on polarization should have particular interdisciplinary impact.