The Role of Experts in Decision-Making

In our daily lives, we often rely on experts for critical information. An “expert,” in this context, refers to someone who is compensated for their opinions. Roger Koppl introduced this definition in his 2018 book, Expert Failure, and it aligns with my own research. This clear definition allows us to avoid the complex and sometimes arbitrary debate about what constitutes an expert.

Experts in Our Lives

Experts influence many aspects of our lives, from weather forecasts and medical advice to technical services, such as auto repairs. Organizations—both governmental and private—also depend on experts, frequently employing internal teams to gather insights and provide informed opinions. The relationship between experts embedded in bureaucracies and the decision-making process forms an intriguing dynamic, which I discuss in my recent working paper titled “Experts Whispering Down the Lane.”

The Communication Challenge

When we interact with an expert—say, our doctor or mechanic—we receive information directly. However, in a larger organization, the communication process includes multiple layers that may obscure the expert’s message from the end-user. For instance, consider a Vice President of Marketing who seeks advice on how to promote a new product. They may ask their manager to gather information, who will then direct their team to compile the necessary insights. After the team assembles this information, they summarize their findings for the manager, who further distills it for the VP. The VP then makes a decision based on this filtered information, which is relayed back through the organization.

In a 1966 paper from the RAND Corporation, Anthony Downs observed how communication can deteriorate within these layers, coining the term “authority leakage” to describe this phenomenon. I argue that information also suffers during its upward transmission, a process I refer to as “information leakage,” where crucial details may be lost, and messages can become garbled. Consequently, the VP may act on misleading information, leading to flawed decisions.

Factors Contributing to Information Leakage

There are several factors that exacerbate the issue of information leakage in bureaucracies. First, there is the economic reality of scarcity. Resources, including time, are finite, compelling experts to make decisions about what information to present. This involves a tradeoff between technical accuracy and comprehensibility; jargon may be incomprehensible to the untrained. While jargon serves a purpose, translating it into layman’s terms risks stripping away important nuances, leading to misunderstandings.

Moreover, human communication often mixes literal and metaphorical language. For example, consider a satellite image capturing a record snowstorm that recently blanketed Massachusetts with 40 inches of snow. When explaining this storm to my Louisiana students, who have limited exposure to snow, I described it as a “hurricane with snow.” While not strictly accurate—since hurricanes are defined as tropical storms—the metaphor helped convey the storm’s severity. However, such metaphors can lose their meaning if misinterpreted. Someone perplexed by this might assume a blizzard is simply a snowy hurricane. Without context or clarity, it can be challenging to determine whether a statement is meant to be taken literally or metaphorically.

The Telephone Effect

The main takeaway here is that the greater the number of communication layers between experts and non-experts, the more likely the original message may become distorted. This phenomenon resembles a game of telephone. Additionally, personal motivations can further cloud communication at each layer.

Why Bureaucracies Persist

Despite these communication issues, the existence of bureaucracies is not without merit. They can aggregate more information than any single individual might achieve on their own. As a result, even with some loss during transmission, non-experts in bureaucracies still have access to a wealth of information that they would not otherwise obtain.

However, as the size of an expert bureaucracy expands, the volume of gathered information tends to increase, while the reliability of transmitted knowledge diminishes. This leads to the concept of a theoretical optimal level of expert bureaucracy—a topic for further exploration.

Broader Implications for Public Choice

Another important insight revolves around Public Choice theory. Scholars, including myself, often focus primarily on governmental, judicial, and voter behavior. Public Choice originally referred to “non-market decision-making,” and the same communication challenges that afflict government processes can also be seen within firms and other non-governmental organizations. Individual businesses are not inherently more efficient than governments; however, when mistakes occur, they are less likely to spiral out of control due to market forces that penalize inefficiency. These profit-oriented organizations possess a built-in motive to make corrective actions, a mechanism that is less prevalent in governmental contexts. Nonetheless, the issues surrounding non-market decision-making are equally relevant in corporate environments.

Conclusion

Ultimately, while experts play a crucial role in informing decisions across various sectors, the complexities introduced by bureaucratic structures can obscure their insights. Recognizing and addressing the implications of information leakage is essential for improving communication and decision-making, whether in government or corporate settings.