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 SUBCOMMITTEE ON SCIENCE, RESEARCH, AND TECHNOLOGY OF THE COMMITTEE ON SCIENCE AND TECHNOLOGY U.S. HOUSE OF REPRESENTATIVES Mr. Chairman and Members of the Committee: The subject of my talk, small group decisionmaking, is a daily concern in Congress. Congressional committees such as the House Science and Technology Committee shape legislation and help determine budgets. More generally, small groups influence and in some cases 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, 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 unambiguous results about small group decisions. Some of the most important are: - 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 to the participants for the option selected by the small group. 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. The significance of the agenda should come as no surprise. The three individual and three issue example comes from the seminal theoretical research over a generation ago by Nobel Laureate Kenneth Arrow on democratic voting systems. Political practitioners intuitively sense the importance of the way issues are considered and often try to time amendments or other motions to affect group decisions. 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 confirm these predictions experimentally. Social scientists are beginning to identify and confirm experimentally the general principles underlying the influence of agendas on small group decisions. The paper by Michael Levine and Charles Plott "Agenda Influence and Its Implications" which I have also provided for the record discusses this research in more detail. The importance and difficulty of analyzing small groups is reflected in the large number of theories from economics, political science, psychology, m mathematics, sociology, and other disciplines on bargaining in small groups. Many of these intuitively plausible theories are used to analyze important real world issues such as arms control negotiations, cartel policies, and union management negotiations. The Fiorina-Plott paper describes sixteen 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. But there is a definite pattern in experimental results partially explained by some of the existing 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 the increasing ability of laboratory experiments to provide timely, relatively inexpensive tests of new policies is also important. In a study on alternative methods of allocating airport slots, which I have provided for the record, David Grether, Mark Isaac and Charles Plott use theory and experiments to show that allocating airport slots through committees composed of the airlines using the airport probably leads to inefficient decisions. Another set of experiments conducted by Charles Plott for the Department of Transportation demonstrated that proposed regulations to help small barge operators and grain farmers by forcing barge operators on the Mississippi to post barge prices would actually have reduced the number of small barge operators and driven up transportation costs if implemented earlier. Experimental research on small group decisions is significant for both basic and applied work and like most fundamental efforts, the findings are generalizable to many issues in the social sciences. |