Collective decisions with interdependent valuations
AbstractMany collective decision problems have the common feature that individuals' desired outcomes are correlated but not identical. This paper studies collective decisions with private information about these desired policies. Each agent holds private information which mainly concerns his own bliss point, but this private information also affects all other agents' bliss points. We concentrate on two specific mechanisms, the mean and the median mechanism. We establish existence of two symmetric Bayesian Nash equilibria of the corresponding game and compare the performance of the mechanisms for different degrees of interdependencies. Applications of our framework include the assignment of voting rights in the council of the European Central Bank, the design of decision processes in teams, firms, and international organizations.
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Bibliographic InfoPaper provided by Post Graduate Programme "Allocation on Financial Markets", University of Mannheim in its series GK working paper series with number 2001-02.
Length: 29 pages
Date of creation: May 2001
Date of revision: Sep 2001
collective decisions; asymmetric information; interdependent valuations;
Find related papers by JEL classification:
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-09-26 (All new papers)
- NEP-CDM-2001-09-26 (Collective Decision-Making)
- NEP-POL-2001-09-26 (Positive Political Economics)
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