CeDEx Seminar - Rebecca McDonald (University of Birmingham)

Absolute groupishness and the demand for information

This study investigates how group identity affects decision makers' uptake and processing of new information. In a theoretically-informed experiment, participants decide whether to purchase up to two reports containing instrumental information about an unknown state of the world. In the baseline condition, they can form beliefs about the reports' accuracy based solely on observing the senders' incentives to report truthfully. In the treatment condition, participants also observe whether they share a minimally-induced group affiliation with the sender. Importantly, senders' incentives to report truthfully do not differ by group affiliation. Despite this exogenously induced symmetry between ingroup and outgroup sources, making group affiliation observable significantly alters information acquisition patterns, leading participants to acquire fewer reports from outgroup sources. Participants display this form of "absolute groupishness" even when outgroup sources have stronger incentives for reporting truthfully. These findings suggest that making group affiliations salient can impair decision-making by hindering accurate belief formation and reducing the quality of informed decision making.