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How Transparency Kills Information Aggregation: Theory and Experiment

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  • Hughes, Niall
  • Fehrler, Sebastian

Abstract

We investigate the potential of transparency to influence committee decisionmaking. We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate and vote. We study three levels of transparency under which career concerns are predicted to affect behavior differently, and test the model’s key predictions in a laboratory experiment. The model’s predictions are largely borne out - transparency negatively affects information aggregation at the deliberation and voting stages, leading to sharply different committee error rates than under secrecy. This occurs despite subjects revealing more information under transparency than theory predicts.

Suggested Citation

  • Hughes, Niall & Fehrler, Sebastian, 2014. "How Transparency Kills Information Aggregation: Theory and Experiment," Economic Research Papers 270226, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:270226
    DOI: 10.22004/ag.econ.270226
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    More about this item

    Keywords

    Financial Economics;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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