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Aggregation of Expert Opinions

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Author Info

  • Dino Gerardi

    ()
    (Department of Economics, Yale University)

  • Richard McLean

    ()
    (Department of Economics, Rutgers University)

  • Andrew Postlewaite

    ()
    (Department of Economics, University of Pennsylvania)

Abstract

Conflicts of interest arise between a decision maker and agents who have information pertinent to the problem because of differences in their preferences over outcomes. We show how the decision maker can extract the information by distorting the decisions that will be taken, and show that only slight distortions will be necessary when agents are informationally small. We further show that as the number of informed agents becomes large the necessary distortion goes to zero. We argue that the particular mechanisms analyzed are substantially less demanding informationally than those typically employed in implementation and virtual implementation. In particular, the equilibria we analyze are conditionally dominant strategy in a precise sense. Further, the mechanisms are immune to manipulation by small groups of agents.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/05-016.pdf
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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 05-016.

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Length: 41 pages
Date of creation: 01 Apr 2005
Date of revision:
Handle: RePEc:pen:papers:05-016

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Related research

Keywords: Information aggregation; Asymmetric information; Cheap talk; Experts;

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References

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  1. Marco Ottaviani & Peter Norman Sørensen, 2006. "Reputational cheap talk," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 155-175, 03.
  2. Battaglini Marco, 2004. "Policy Advice with Imperfectly Informed Experts," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-34, April.
  3. Jackson, Matthew O., 1999. "A Crash Course in Implementation Theory," Working Papers 1076, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Matsushima Hitoshi, 1993. "Bayesian Monotonicity with Side Payments," Journal of Economic Theory, Elsevier, vol. 59(1), pages 107-121, February.
  5. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  6. Richard P. McLean & Andrew Postlewaite, 2006. "Implementation with Interdependent Valuations," Levine's Bibliography 122247000000001242, UCLA Department of Economics.
  7. Gul, Faruk & Postlewaite, Andrew, 1992. "Asymptotic Efficiency in Large Exchange Economies with Asymmetric Information," Econometrica, Econometric Society, vol. 60(6), pages 1273-92, November.
  8. Ottaviani, Marco & Sorensen, Peter Norman, 2006. "Professional advice," Journal of Economic Theory, Elsevier, vol. 126(1), pages 120-142, January.
  9. Roberto Serrano & Rajiv Vohra, 2002. "A Characterization of Virtual Bayesian Implementation," Working Papers 2002-11, Brown University, Department of Economics.
  10. Timothy Feddersen & Wolfgang Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections with Private Information," Econometrica, Econometric Society, vol. 65(5), pages 1029-1058, September.
  11. Timothy Feddersen & Wolfgang Pesendorfer, 1996. "Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts," Discussion Papers 1170, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  12. RICHARD McLEAN & ANDREW POSTLEWAITE, 2004. "Informational Size and Efficient Auctions," Review of Economic Studies, Wiley Blackwell, vol. 71, pages 809-827, 07.
  13. Austen-Smith David, 1993. "Interested Experts and Policy Advice: Multiple Referrals under Open Rule," Games and Economic Behavior, Elsevier, vol. 5(1), pages 3-43, January.
  14. Abreu, Dilip & Sen, Arunava, 1991. "Virtual Implementation in Nash Equilibrium," Econometrica, Econometric Society, vol. 59(4), pages 997-1021, July.
  15. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
  16. Marco Battaglini, 2002. "Multiple Referrals and Multidimensional Cheap Talk," Econometrica, Econometric Society, vol. 70(4), pages 1379-1401, July.
  17. Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, vol. 53(2), pages 345-61, March.
  18. John Duggan, 1997. "Virtual Bayesian Implementation," Econometrica, Econometric Society, vol. 65(5), pages 1175-1200, September.
  19. Wolinsky, Asher, 2002. "Eliciting information from multiple experts," Games and Economic Behavior, Elsevier, vol. 41(1), pages 141-160, October.
  20. Richard McLean & Andrew Postlewaite, . "Informational Size and Incentive Compatibility," CARESS Working Papres 99-14, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  21. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
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Citations

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Cited by:
  1. Jackson, Matthew O. & Tan, Xu, 2013. "Deliberation, disclosure of information, and voting," Journal of Economic Theory, Elsevier, vol. 148(1), pages 2-30.
  2. Elisabeth Schulte, 2010. "Information aggregation and preference heterogeneity in committees," Theory and Decision, Springer, vol. 69(1), pages 97-118, July.
  3. Casamatta, Catherine & Haritchabalet, Carole, 2007. "Experience, screening and syndication in venture capital investments," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 368-398, July.
  4. Junichiro Ishida & Takashi Shimizu, 2009. "Cheap Talk with an Informed Receiver," ISER Discussion Paper 0746, Institute of Social and Economic Research, Osaka University.
  5. Luis C. Corchon, 2007. "The theory of implementation : what did we learn?," Economics Working Papers we081207, Universidad Carlos III, Departamento de Economía.
  6. Inga Deimen & Felix Ketelaar & Mark T. Le Quement, 2013. "Consistency and Communication in Committees," Bonn Econ Discussion Papers bgse02_2013, University of Bonn, Germany.
  7. Pablo Amorós, 2009. "Picking the Winners," Working Papers 2009-2, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
  8. Elisabeth Schulte, 2012. "Communication in committees: who should listen?," Public Choice, Springer, vol. 150(1), pages 97-117, January.
  9. Dezsö Szalay & Ramon Arean, 2005. "Communicating with a Team of Experts," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.12, Université de Lausanne, Faculté des HEC, DEEP.
  10. Tilman Klumpp, 2007. "Communication in financial markets with several informed traders," Economic Theory, Springer, vol. 33(3), pages 437-456, December.
  11. Hahn, Robert W. & Lien, Don & Tetlock, Paul C., 2005. "Designing Information Markets for Decision Making," Working paper 426, Regulation2point0.

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