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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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
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
David Austen-Smith & Tim Feddersen, 2002.
"Deliberation and Voting Rules,"
Discussion Papers
1359, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
[Downloadable!]
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.
[Downloadable!]
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