Moderation in Groups: Evidence from Betting on Ice Break-ups in Alaska

We use a large sample of guessed ice break-up dates for the Tanana River in Alaska to study differences between outcomes of decisions made by individuals versus groups. We estimate the distribution of guesses conditional on whether they were made by individual bettors or betting pools. We document two major distinctions between the two sets of guesses: (1) the distribution of guesses made by groups of bettors appears to conform more to the distribution of historical break-up dates than the distribution of guesses made by individual bettors, and (2) the distribution for groups has less mass in its tails and displays lower variability than the distribution for individuals. We argue that these two pieces of evidence are consistent with the hypothesis that group decisions are more moderate, either because groups have to reach a compromise when their members disagree or because individuals with extreme opinions are less likely to be part of a group.