Charles Plott

Charles Plott appears in the book chiefly through an experiment on how decision rules shape the intelligence a group can use. Working with Angela Hung, he showed that when participants were rewarded for the accuracy of the group’s answer rather than their own, they relied more on private information and the group’s collective judgment became significantly more accurate than that of groups vulnerable to information cascades.

The urn experiment

Hung and Plott’s classroom experiment gave participants a choice between two urns whose contents differed in opposite ways: Urn A held twice as many light marbles as dark ones, while Urn B held twice as many dark marbles as light ones. The experimenters secretly selected one urn, and volunteers drew marbles in sequence. Each participant had a private clue in the color drawn, but could reveal only a guess about which urn was in use—not the color itself. A correct individual answer initially earned a couple of dollars.

That arrangement set private evidence against the visible guesses of earlier participants. A student might draw a light marble, which favored Urn A, after seeing three people guess Urn B. Most students in that position followed the earlier guesses and chose Urn B. The book describes this as rational in the circumstances: once earlier choices were visible, they could outweigh the limited clue supplied by a single draw. Information cascades began in 78 percent of the trials.

Changing the incentive

Hung and Plott then altered what participants were paid for. Students still drew marbles and answered in sequence, but their reward depended on whether the group’s answer, determined by majority vote, was correct. The task had shifted: success now meant helping the group identify the urn, not simply maximizing the chance of an individual correct answer.

Under that incentive, students had reason to give greater weight to their own imperfect evidence and less to the guesses already heard. An individual who relied on a private clue could still be wrong; the important result was that the group became more likely to be right. The collective judgment under the revised rule was significantly more accurate than the judgment of cascading groups. The experiment therefore illustrates how a rule can improve group performance without making each participant’s information more reliable: what changes is whether that information remains independent enough to contribute to the whole.

Wider significance

The book presents the experiment as evidence for limiting the sequential influence of earlier decisions. In a cascade, participants decide one after another and may infer too much from previous guesses, suppressing private information that could correct the group. By making individual payoffs depend on collective accuracy, Hung and Plott reduced the importance of those earlier choices and encouraged participants to make themselves more independent.

The implication is especially practical for organizations, which can ask people to submit judgments simultaneously rather than one after another. The book contrasts this possibility with the difficulty of changing sequential decisions across an entire economy. Plott’s experiment thus supports a broader argument: collective judgment depends not only on assembling people, but also on structuring their incentives and information so that the group can combine distinct evidence rather than merely repeat what has already been said.

Other research contexts

Plott is also named among economists associated with decision markets. The book describes FutureMAP, an ultimately aborted plan funded by the Defense Advanced Research Projects Agency, that would have used markets to aggregate forecasts from intelligence analysts and possibly outside experts. Its proposed internal markets were intended to let analysts from different agencies trade contracts tied to expectations about events in the Middle East and elsewhere, potentially including terrorist attacks. The account does not specify Plott’s individual role in that program; his inclusion places him among the researchers connected to the wider investigation of how market mechanisms might gather dispersed judgments.