Learning while voting: determinants of collective experimentation
Abstract
This paper analyzes collective decision making when individual preferences evolve through learning. Votes are affected by their anticipated effect on future preferences. The analysis is conducted in a two-arm bandit model with a safe alternative and a risky alternative whose payoff distribution, or “type”, varies across individuals and may be learned through experimentation. Society is shown to experiment less than any of its members would if he could dictate future decisions, and to be systematically biased against experimentation compared to the utilitarian optimum. Control sharing can even result in negative value of experimentation: society may shun a risky alternative even its expected payoff is higher than the safe one’s. Commitment to a fixed alternative can only increase efficiency if aggregate uncertainty is small enough. Even when types are independent, a positive news shock for anyone raises everyone’s incentive to experiment. Ex ante preference correlation or heterogeneity reduces these inefficiencies.Download Info
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Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2008-W08.Length: 45 pages
Date of creation: 05 2008
Date of revision:
Handle: RePEc:nuf:econwp:0808
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Web page: http://www.nuff.ox.ac.uk/economics/
Related research
Keywords:Other versions of this item:
- Bruno Strulovici, 2010. "Learning While Voting: Determinants of Collective Experimentation," Econometrica, Econometric Society, vol. 78(3), pages 933-971, 05.
- Bruno Strulovici, 2008. "Learning While Voting: Determinants of Collective Experimentation," Economics Series Working Papers 2008-WO8, University of Oxford, Department of Economics.
- NEP-ALL-2008-06-27 (All new papers)
- NEP-CDM-2008-06-27 (Collective Decision-Making)
- NEP-POL-2008-06-27 (Positive Political Economics)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Pástor, Luboš & Veronesi, Pietro, 2010.
"Uncertainty about Government Policy and Stock Prices,"
CEPR Discussion Papers
7897, C.E.P.R. Discussion Papers.
- Lubos Pástor & Pietro Veronesi, 2012. "Uncertainty about Government Policy and Stock Prices," Journal of Finance, American Finance Association, vol. 67(4), pages 1219-1264, 08.
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- Lubos Pastor & Pietro Veronesi, 2010. "Uncertainty about Government Policy and Stock Prices," Working Papers 2010-008, Becker Friedman Institute for Research In Economics.
- Ufuk Akcigit & Qingmin Liu, 2011. "The Role of Information in Competitive Experimentation," PIER Working Paper Archive 11-038, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Benny Moldovanu & Xianwen Shi, 2010. "Search Committees," Working Papers tecipa-413, University of Toronto, Department of Economics.
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- Keller, Godfrey & Rady, Sven, 2012.
"Breakdowns,"
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
396, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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"Political Uncertainty and Risk Premia,"
CEPR Discussion Papers
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- Christian Roessler & Sandro Shelegia & Bruno Strulovici, 2013. "The Roman Metro Problem: Dynamic Voting and the Limited Power of Commitment," Discussion Papers 1560, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Shi, Xianwen & Moldovanu, Benny, 0. "Specialization and partisanship in committee search," Theoretical Economics, Econometric Society.
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