Rational exaggeration in information aggregation games
AbstractThis paper studies a class of information aggregation models which we call Ã¢â¬Åaggregation games.Ã¢â¬ It departs from the related literature in two main respects: information is aggregated by averaging rather than majority rule, and each player selects from a continuum of reports rather than making a binary choice. Each member of a group receives a private signal, then submits a report to the center, who makes a decision based on the average of these reports. The essence of an aggregation game is that heterogeneous players engage in a Ã¢â¬Åtug-of-war,Ã¢â¬ as they attempt to manipulate the centerÃ¢â¬â¢s decision process by mis-reporting their private information. When players have distinct biases, almost of them rationally exaggerate the extent of these biases. The degree of exaggeration increases with the number of players: if the game is sufficiently large, then almost all players exaggerate to the maximum admissible extent, regardless of their individual signals. In the limit, the connection between playersÃ¢â¬â¢ private information and the outcome of the game is obliterated.
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Bibliographic InfoPaper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1067.
Length: 46 pages
Date of creation: 2008
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Other versions of this item:
- Rausser, Gordon C. & Simon, Leo K. & Zhao, Jinhua, 2008. "Rational Exaggeration in Information Aggregation Games," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9nc4n5s6, Department of Agricultural & Resource Economics, UC Berkeley.
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