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Committee Design in the Presence of Communication

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Abstract

The goal of this paper is to introduce communication in a collective choice environment with information acquisition. We concentrate on decision panels that are comprised of agents sharing a common goal and having a joint task. Members of the panel decide whether to acquire costly information or not, preceding the communication stage. We take a mechanism design approach and consider a designer who can choose the size of the decision panel, the procedure by which it selects the collective choice, and the communication protocol by which its members abide prior to casting their individual action choices. We characterize the solution of this extended design problem. We find that the optimal communication protocol in such an environment balances a tradeoff between inducing players to acquire information and extracting the maximal amount of information from them. In particular, the optimal device may lead to suboptimal aggregation of information from a statistical point of view. Furthermore, groups producing the optimal collective decisions are bounded in size. Comparative statics results shed light on the regularities the design solution exhibits. For example, the expected utility of all agents decreases with the cost of private information and increases with its accuracy, but the optimal panel size is not monotonic in the signals' accuracy.

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File URL: http://cowles.econ.yale.edu/P/cd/d14a/d1411.pdf
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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1411.

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Length: 42 pages
Date of creation: Mar 2003
Date of revision:
Publication status: Published in Games and Economic Behavior "Information Acquisition in Committee," forthcoming
Handle: RePEc:cwl:cwldpp:1411

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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

Related research

Keywords: Communication; Collective Choice; Mechanism Design; Strategic Voting; Information Acquisition;

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References

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  1. Alesina, Alberto & Gatti, Roberta, 1995. "Independent Central Banks: Low Inflation at No Cost?," American Economic Review, American Economic Association, vol. 85(2), pages 196-200, May.
  2. Timothy Feddersen & Wolfgang Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections With Private Information," Levine's Working Paper Archive 1560, David K. Levine.
  3. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
  4. David Austen-Smith & Tim Feddersen, 2002. "Deliberation and Voting Rules," Discussion Papers 1359, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Timothy J. Feddersen & Wolfgang Pesendorfer, 1995. "The Swing Voter's Curse," Discussion Papers 1064, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Emmanuelle Auriol & Robert J. Gary-Bobo, 1998. "On the Optimal Number of Representatives," Discussion Papers 1286, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Dino Gerardi & Leeat Yariv, 2003. "Putting Your Ballot Where you Mouth Is: An Analysis of Collective Choice," Levine's Working Paper Archive 506439000000000280, David K. Levine.
  8. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Wiley Blackwell, vol. 71(1), pages 165-191, 01.
  9. Dino Gerardi & Leeat Yariv, 2003. "Putting Your Ballot Where Your Mouth Is: An Analysis of Collective Choice with Communication," UCLA Economics Working Papers 827, UCLA Department of Economics.
  10. Doraszelski Ulrich & Gerardi Dino & Squintani Francesco, 2003. "Communication and Voting with Double-Sided Information," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-41, August.
  11. Timothy Feddersen & Wolfgang Pesendorfer, 1996. "Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts," Discussion Papers 1170, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  12. Hao Li, 2001. "A Theory of Conservatism," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 617-636, June.
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Cited by:
  1. Dino Gerardi & Leeat Yariv, 2003. "Putting Your Ballot Where Your Mouth Is: An Analysis of Collective Choice with Communication," UCLA Economics Working Papers 827, UCLA Department of Economics.
  2. Heather Kohls & Russell Kashian, 2006. "Comprehensive Planning: Is There a Relationship between Committee Design and Subsequent Outcome: A Baseline Survey," Working Papers 06-04, UW-Whitewater, Department of Economics.
  3. Elisabeth Schulte, 2006. "Information Aggregation and Preference Heterogeneity in Committees," JEPS Working Papers 06-003, JEPS.
  4. Gerardi, Dino & Yariv, Leeat, 2008. "Information acquisition in committees," Games and Economic Behavior, Elsevier, vol. 62(2), pages 436-459, March.

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