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Over-Caution of Large Committees of Experts

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  • Rune Midjord
  • Tomas Rodriguez Barraquer
  • Justin Valasek
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    Abstract

    In this paper, we demonstrate that payoffs linked to a committee member's individual vote may explain over-cautious behavior in committees. A committee of experts must decide whether to approve or reject a proposed innovation on behalf of society. In addition to a payoff linked to the adequateness of the committee's decision, each expert receives a disesteem payoff if he/she voted in favor of an ill-fated innovation. An example is FDA committees, where committee members can be exposed to a disesteem (negative) payoff if they vote to pass a drug that proves to be fatal for some users. We show that no matter how small the disesteem payoffs are, information aggregation fails in large committees: under any majority rule, the committee rejects the innovation almost surely. We then show that this inefficiency can be mitigated by pre-vote information pooling, but only if the decision is take under unanimity: in the presence of disesteem payoffs, committee members will only vote efficiently if they are all responsible for the final decision.

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    Bibliographic Info

    Paper provided by The Center for the Study of Rationality, Hebrew University, Jerusalem in its series Discussion Paper Series with number dp654.

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    Length: 44 pages
    Date of creation: Dec 2013
    Date of revision:
    Handle: RePEc:huj:dispap:dp654

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    Keywords: Committees; Information aggregation; Disesteem payoffs;

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    References

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    1. 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.
    2. Brennan, Geoffrey & Pettit, Philip, 2004. "The Economy of Esteem: An Essay on Civil and Political Society," OUP Catalogue, Oxford University Press, number 9780199246489, September.
    3. John Morgan & Felix Várdy, 2012. "Mixed Motives and the Optimal Size of Voting Bodies," Journal of Political Economy, University of Chicago Press, vol. 120(5), pages 986 - 1026.
    4. Kiel, Alexandra & Gerling, Kerstin & Schulte, Elisabeth & Grüner, Hans Peter, 2003. "Information acquisition and decision making in committees: a survey," Working Paper Series 0256, European Central Bank.
    5. Li Hao & Wing Suen, 2009. "Viewpoint: Decision-making in committees," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 359-392, May.
    6. Bezalel Peleg & Shmuel Zamir, 2012. "Extending the Condorcet Jury Theorem to a general dependent jury," Social Choice and Welfare, Springer, vol. 39(1), pages 91-125, June.
    7. Callander, Steven, 2008. "Majority rule when voters like to win," Games and Economic Behavior, Elsevier, vol. 64(2), pages 393-420, November.
    8. Gilat Levy, 2007. "Decision Making in Committees: Transparency, Reputation, and Voting Rules," American Economic Review, American Economic Association, vol. 97(1), pages 150-168, March.
    9. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers 5768, C.E.P.R. Discussion Papers.
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