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Multiple solutions under quasi-exponential discounting

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Author Info
Nicolas Vieille (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - GROUPE HEC - CNRS : UMR2959, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
Jörgen Weibull (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, SSE - Department of Economics - Stockholm School of Economics)

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Abstract

We consider a group or committee that faces a binary decision under uncertainty. Each member holds some private information. Members agree which decision should be taken in each state of nature, had this been known, but they may attach different values to the two types of mistake that may occur. Most voting rules have a plethora of uninformative equilibria, and informative voting may be incompatible with equilibrium. We analyze an anonymous randomized majority rule that has a unique equilibrium. This equilibrium is strict, votes are informative, and the equilibrium implements the optimal decision with probability one in the limit as the committee size goes to infinity. We show that this also holds for the usual majority rule under certain perturbations of the behavioral assumptions: (i) a slight preference for voting according to one's conviction, and (ii) transparency and a slight preference for esteem. We also show that a slight probability for voting mistakes strengthens the incentive for informative voting.

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Paper provided by HAL in its series Working Papers with number hal-00354231_v1.

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Date of creation: Mar 2008
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Handle: RePEc:hal:wpaper:hal-00354231_v1

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Related research
Keywords: : time-consistency; hyperbolic discounting; stochastic dynamic programming; multiplicity; uniqueness.;

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  1. Saez-Marti, Maria & Weibull, Jorgen W., 2005. "Discounting and altruism to future decision-makers," Journal of Economic Theory, Elsevier, vol. 122(2), pages 254-266, June. [Downloadable!] (restricted)
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  2. Joseph G. Eisenhauer & Luigi Ventura, 2006. "The prevalence of hyperbolic discounting: some European evidence," Applied Economics, Taylor and Francis Journals, vol. 38(11), pages 1223-1234, June. [Downloadable!] (restricted)
  3. Asheim, G.B., 1991. "Individual and Collective Time Consistency," Papers 9169, Tilburg - Center for Economic Research.
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  4. Robert J. Barro, 1999. "Ramsey Meets Laibson In The Neoclassical Growth Model," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1125-1152, November. [Downloadable!] (restricted)
  5. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
  6. Goldman, Steven M, 1980. "Consistent Plans," Review of Economic Studies, Blackwell Publishing, vol. 47(3), pages 533-37, April. [Downloadable!] (restricted)
  7. Peleg, Bezalel & Yaari, Menahem E, 1973. "On the Existence of a Consistent Course of Action when Tastes are Changing," Review of Economic Studies, Blackwell Publishing, vol. 40(3), pages 391-401, July. [Downloadable!] (restricted)
  8. Harris, Christopher & Laibson, David, 2001. "Dynamic Choices of Hyperbolic Consumers," Econometrica, Econometric Society, vol. 69(4), pages 935-57, July.
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  9. Jehiel, Philippe, 2001. "Limited Foresight May Force Cooperation," Review of Economic Studies, Blackwell Publishing, vol. 68(2), pages 369-91, April.
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