The authors study how the quality of decision making, in this case by credit officers, depends on
whether decisions are made at the group or individual level
whether soft information is available beyond hard information
the incentive structure that officers face.
They find that individual credit officers are 28% less likely to assess applications correctly when soft information (e.g. caste of applicant) is provided. Further, biased individuals – as measured by an implicit association
tests (IAT) – make worse decisions, particularly when their caste differs from the applicant’s. However, we find that when evaluators are paired, the quality of decision making improves, especially when pairs are mixed-caste.
This research was funded under the Private Enterprise Development in Low Income Countries (PEDL) Programme
Wan, X. Y., Chandrasekhar, A. (2019) Joint Lending, not Borrowing: A New Approach to Credit and Entrepreneurship in LDCs, PEDL
Published 28 February 2019