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Decision making in committees: transparency, reputation, and voting rules

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  • Gilat Levy
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    Abstract

    In this paper I analyze the effect of the transparency of the decision making process in committees on the decisions that are eventually taken. I focus on committees whose members are motivated by career concerns, so that each member tries to enhance his own reputation. When the decision making process is secretive, the individual votes of the committee members are not exposed to the public but only the final decision. Thus, individuals are evaluated according to the group's decision. I find that in such a case, group members are induced to comply with preexisting biases. For example, if the voting rule demands a supermajority to accept a reform, individuals vote more often against reforms and exacerbate the conservatism of the voting rule. When the decision making process becomes transparent and individual votes are observed, this effect disappears and such committees are then more likely to accept reforms. I also find that coupled with the right voting rule, a secretive procedure may induce better decisions than a transparent one.

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    File URL: http://eprints.lse.ac.uk/3697/
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    Bibliographic Info

    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 3697.

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    Date of creation: Mar 2007
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    Publication status: Published in American Economic Review, March, 2007, 97(1), pp. 150-168. ISSN: 0002-8282
    Handle: RePEc:ehl:lserod:3697

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    References

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    1. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 165-191.
    2. Trueman, Brett, 1994. "Analyst Forecasts and Herding Behavior," Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 97-124.
    3. Anne Sibert, 2003. "Monetary Policy Committees: Individual and Collective Reputations," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 649-665.
    4. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 71(1), pages 165-191, 01.
    5. John Fingleton, 2005. "Career Concerns of Bargainers," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 21(1), pages 179-204, April.
    6. Andrea Prat, 2002. "The Wrong Kind of Transparency," STICERD - Theoretical Economics Paper Series, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE 439, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    7. Sibert, Anne, 1999. "Monetary Policy Committees: Individual and Collective Reputations," CEPR Discussion Papers 2328, C.E.P.R. Discussion Papers.
    8. Levy, Gilat, 2004. "Anti-herding and strategic consultation," European Economic Review, Elsevier, vol. 48(3), pages 503-525, June.
    9. Ottaviani, Marco & Sorensen, Peter, 2001. "Information aggregation in debate: who should speak first?," Journal of Public Economics, Elsevier, vol. 81(3), pages 393-421, September.
    10. Gilat Levy, 2004. "Anti-herding and strategic consultation," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 541, London School of Economics and Political Science, LSE Library.
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    Cited by:
    1. Junichiro Ishida, 2009. "Why Hierarchy? Communication and Information Acquisition in Organizations," ISER Discussion Paper 0751, Institute of Social and Economic Research, Osaka University.
    2. FU, Qiang & LI, Ming, 2010. "Policy Making with Reputation Concerns," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 09-2010, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    3. Riboni, Alessandro & Ruge-Murcia, Francesco, 2011. "Dissent in Monetary Policy Decisions," Economics Papers from University Paris Dauphine 123456789/7718, Paris Dauphine University.
    4. Nadya Malenko, 2011. "Communication and Decision-Making in Corporate Boards," 2011 Meeting Papers 449, Society for Economic Dynamics.
    5. Otto H. Swank & Bauke Visser, 2008. "Is Transparency to No Avail? Committee Decision-Making, Pre-Meetings, and Credible Deals," Economics Working Papers, European University Institute ECO2008/18, European University Institute.
    6. Prato, Carlo & Wolton, Stephane, 2014. "The Voters' Curses: The Upsides and Downsides of Political Engagement," MPRA Paper 53482, University Library of Munich, Germany.
    7. repec:dgr:uvatin:2007055 is not listed on IDEAS
    8. Alessandro Riboni, 2013. "Ideology and endogenous constitutions," Economic Theory, Springer, Springer, vol. 52(3), pages 885-913, April.
    9. Jordi Blanes i Vidal & Marc Möller, 2013. "Decision-making and implementation in teams," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 51544, London School of Economics and Political Science, LSE Library.
    10. Hahn, Volker, 2008. "Committees, sequential voting and transparency," Mathematical Social Sciences, Elsevier, Elsevier, vol. 56(3), pages 366-385, November.
    11. Zudenkova, Galina, 2012. "A rationale for intra-party democracy," MPRA Paper 39091, University Library of Munich, Germany.

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