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On the Optimal Number of Representatives

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  • Emmanuelle Auriol
  • Robert J. Gary-Bobo

Abstract

We study a model of public decision-making in simple public goods economies with moral hazards and adverse selection. Economic agents must invest resources (or provide effort) to discover their own preferences. We consider direct revelation mechanisms based on sampling. A sample of agents is drawn in the population, and each member of the sample reports a preferences type to a Principal. The determinants of the "representative sample" size are studied. The structure and magnitude of effort and sampling costs affects the optimal number of representatives. If the net social value of the effort is high, first and second best optimality require a maximal sample (or "direct democracy"). If, on the contrary, effort is too costly, the recourse to samples ("representative democracy") is justified as a second best. To obtain the results, we not only take effort and revelation incentives into account, but also restrict decision rules to satisfy an additional property of robustness to opportunistic manipulation by the Principal, which forbids the use of a priori knowledge in public decision procedures.

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Bibliographic Info

Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1286.

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Date of creation: Feb 1998
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Handle: RePEc:nwu:cmsems:1286

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Cited by:
  1. Piolatto, Amedeo, 2008. "Electoral systems and the distortion of voters' preferences," MPRA Paper 12610, University Library of Munich, Germany, revised 08 Jan 2009.
  2. Helge Berger & Volker Nitsch & Tonny Lybek, 2007. "Central Bank Boards around the World: Why does Membership Size Differ?," CESifo Working Paper Series 1897, CESifo Group Munich.
  3. Emmanuelle Auriol & Robert J. Gary-Bobo, 1998. "On the Optimal Number of Representatives," Discussion Papers 1286, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Auriol, Emmanuelle & Gary-Bobo, Robert J., 2002. "On Robust Constitution Design," CEPR Discussion Papers 3303, C.E.P.R. Discussion Papers.
  5. Dino Gerardi & Leeat Yariv, 2003. "Committee Design in the Presence of Communication," Cowles Foundation Discussion Papers 1411, Cowles Foundation for Research in Economics, Yale University.
  6. Dino Gerardi & Leeat Yariv, 2007. "Information Acquisition in Committees," Cowles Foundation Discussion Papers 1411R, Cowles Foundation for Research in Economics, Yale University.

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