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questioning because it is the public's money. So, there is a need somehow in our communication and as we make these kinds of presentations to deliver the underlying purpose for a particular effort. I am not sure that comes across. You see the effort full-blown but, in many cases, there is a need to introduce some of these things, particularly if some levels of public opinon are less than totally educated as to the whys and the wherefores. I think, again, we need to make a stronger effort toward providing the kind of background that you so eloquently provide here.

Dr. FRIEDL. Thank you. You give us good advice.

Mr. BROWN. Well, we have to move on but let me just say, Dr. Yellen, in more or less the form of a comment, that when Margaret Meade and Benedict and others were investigating sexual mores in the South Seas. it was controversial even without a special report. I am not sure, in the light of changing cultural attitudes toward sex in our own culture today, that it would be quite as controversial now as it was then.

Thank you very much, Dr. Yellen.

Dr. CLARK. Dr. Newlon, I am sure will be very quick. He will be discussing the final topic of our presentation on the question of public choice and new studies that give us decisionmaking in small groups.

Mr. Brown. This is from the economics program?
Dr. CLARK. This is from the economics program.

STATEMENT OF DR. DANIEL H. NEWLON, ASSOCIATE PROGRAM

DIRECTOR FOR THE ECONOMICS PROGRAM, NSF Dr. Newlon. This is, in fact, from the economics program, the sociology program, the political science program, and even the geography program. We picked this topic because of the interdisciplinary nature of the research and the fact that all of the programs in the social and economic science division are involved in this area of research.

But if there are other areas of controversy in sociology, political science, or economics that you would like to discuss; now or at another time, we would be delighted to go over those areas of controversy and explain the significance of the research.

Small group decision making is, of course, a daily concern in Congress. Congressional committees such as the House Science and Technology Committee shape legislation and help determine budget. More generally, small groups influence and, at times, determine some of the most important social, political, and economic decisions.

The National Science Foundation supports theoretical and empirical research on the way small groups decide. This presentation will emphasize the relatively new NSF-supported experimental research at the University of Arizona, Carnegie-Mellon Institute, and others.

The NSF-supported research is exciting because of developments in three areas. First, there is evidence that the way small group decisions are organized matters in a manner that can be captured mathematically and tested experimentally.

Second, experiments differentiate among the many competing explanations of small group decision. These theories are very important. These theories are now used to study cartels, union management relations, arms control negotiations, jury decisions, and other bargaining situations.

Third, the methodology developed for basic research with NSF funding can provide timely and relatively inexpensive sources of new information on the effects of proposed policy changes.

Since time today is limited, I have 20 copies of 2 papers that go at length into a discussion of the significance of this research and describe some complicated experiments. I would be delighted to discuss these papers and this research at more length when we have more time.

I constructed a simple experiment to illustrate the nature and the way these experiments are conducted. Let me run through it quickly.

In this experiment, we would select three participants, at random. These participants would form a group. The group would select one of three options, labeled “x,” “y,” and “z.” Conflicting preferences for these options would be created by different patterns of the words for the decisions selected by the small group. Let me be more specific.

The first individual would receive the largest reward if the group selected option “x.” The next largest reward is for “y” and the smallest reward is for option "z."

A different pattern of rewards for the second and third individuals would produce different preferences for the choice of this group.

The agenda, the organization, the way issues are structured influences the outcome, the option which this committee will choose using a majority decision rule. For example, if we could compare “x” and "y,” we have a majority vote between these two issues—"x" will win. If we then compare “q” and “z," a majority will select "z" and "z” will be the option selected by majority vote. If we change the agenda to start with “x” and “z;" we end up with “y.” If we change the agenda again and start with “y” and “z,” we end up with “x.”

The experimenter, by controlling the agenda, the organization, the structure of this very simple group, can influence the outcome in any one of these three options.

Mr. Brown. That is a very interesting experiment which has obvious implications right here in Congress.

Dr. Newlon. I was going to say, the importance of the agenda will not surprise you. Politicians sense intuitively the importance of the way issues are considered. Amendments or other motions are often timed to affect decisions.

This research is not new theoretically, either. The three individuals, three-issue example that I used here is taken from the seminal theoretical research over a generation ago by Nobel Laureate Kenneth Arrow on democratic voting systems.

What is new is the ability of social scientists to induce through rewards a structure of preferences in an experimental group similar to an actual group, to predict from theory the influence of different agendas on the decisions by the two groups, and then to test these predictions experimentally on the experimental group. Eventually, this theoretical and experimental research could lead to experimentally confirmed mathematical laws on the ways organization influences small group behavior.

The importance and difficulty of analyzing small groups is reflected in the large number of theories from economics, political science, psychology, mathematics, sociology, and other disciplines on bargaining in small groups. Many of these intuitively plausible theories are used to analyze important real world issues.

The papers I have handed out, describe 16 different bargaining theories. One of the surprises of experimental research is that many of the most widely used theories fail to predict the outcome of small group experiments. Small group experiments have stable outcomes, and these outcomes can be used to differentiate among the theories.

Much work remains to be done. More complicated experiments need to be conducted to determine if the bargaining theories that fail to perform well in simple experiments work better in more complex settings. Theorists are trying to explain the stable outcomes of these experiments in terms of a general powerful bargaining theory that includes as special cases those theories that work.

The emphasis in my talk has been on the value of basic experimental research on the general principles of agenda influence and on bargaining theories. But this methodology developed for basic research is starting to be used for policy analysis. The Civil Aeronautics Board hired, as consultants, David Grether, Mark Isaac, and Charles Plott from the California Institute of Technology to test experimentally the efficiency of current regulations governing the committees that allocate space at airports. Charles Plott conducted experiments with the Department of Transportation that demonstrated that proposed legislation designed to help small barge operators on the Mississippi would, in fact, have driven, if the experiments were accurate, half of them out of business.

Experimental research on small group decisions is significant then both as basic and applied work.

[The prepared statement of Dr. Newlon follows:)

STATEMENT OF
DR. DANIEL H. NEWLON
ASSOCIATE PROGRAM DIRECTOR
FOR THE ECONOMICS PROGRAM

BEFORE THE
SUBCOMMITTEE ON SCIENCE, RESEARCH, AND TECHNOLOGY

OF THE
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES

FEBRUARY 20, 1980

Mr. Chairman and Members of the Committee:

The subject of my talk, small group decisionmaking, is a daily concern

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most important social, political, and economic decisions.

The National Science Foundation supports theoretical and empirical

research on the way small groups decide.

This presentation will emphasize

the relatively new NSF supported experimental research at the University of

Arizona, Carnegie-Mellon Institute, California Institute of Technology, the

University of Illinois, Texas A&M, and Northwestern. With the exception of

psychology, experimental methods have not been widely used in the social

sciences.

The NSF supported research is exciting because replicable laboratory

experiments are providing apparently un ambiguous results about small group

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- a systematic body of knowledge on the influence of agendas,

- evidence that contradicts many and supports some of the theories of

small group decisionmaking used in applied social science,

and

timely and relatively inexpensive simulations of policy changes

I have provided for the record a copy of Morris Fiorina and Charles

Plott's "Committee Decisions Under Majority Rule:

An Experimental Study."

This paper describes in detail the experimental methods and the significance

of

some of the results.

But I would like to describe a much simpler

experiment to give you a sense of the way the experiments are conducted and

to illustrate the nature of the results.

Unfortunately, we do not have

enough time to actually carry out the experiment.

In this simplified experiment three people would be selected at random

from the audience. This small group would be asked to select one of the three

options labelled "x", "y", and "z" using a majority voting rule. Different

preferences for these options would be created by offering different rewards

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Specifically, individual I receives the largest reward if option "x" is

selected, the next largest for "y", and the smallest for "z". Individuals II

and III have different preferences induced by different patterns of rewards.

The agenda is controlled by the experimenter.

The significance of the agenda is shown by comparing the votes under

three different agendas.

In the first case, "x" commands a majority (I and

III) over "y" but "z" defeats "x" (II and III), so the group selects "z". But

if the agenda is changed so

that "x" and "z" are compared first then a

majority eventually selects "y".

In theory and given enough time we could

confirm in practice, the experimenter can change the outcome of the small

group vote to any of the three options by changing the agenda.

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