Rational Groupthink

We study how long-lived rational agents learn from repeatedly observing a private signal and each others’ actions. With normal signals, a group of any size learns more slowly than just four agents who directly observe each others’ private signals in each period. Similar results apply to general signal structures. We identify rational groupthink—in which agents ignore their private signals and choose the same action for long periods of time—as the cause of this failure of information aggregation.