Optimal Voting Schemes with Costly Information Acquisition
A group of individuals with identical preferences must make a decision under uncertainty about which decision is best. Before the decision is made, each agent can privately acquire a costly and imperfect signal. We discuss how to design a mechanism for eliciting and aggregating the collected information so as to maximize ex-ante social welfare. We first show that, of all mechanisms, a sequential one is optimal and works as follows. At random, one agent at a time is selected to acquire information and report the resulting signal. Agents are informed of neither their position in the sequence nor of other reports. Acquiring information when called upon and reporting truthfully is an equilibrium. We next characterize the ex-ante optimal scheme among all ex-post efficient mechanisms. In this mechanism, a decision is made when the precision of the posterior exceeds a cut-off that decreases with each additional report. The restriction to ex-post efficiency is shown to be without loss when the available signals are sufficiently imprecise. On the other hand, ex-post efficient mechanisms are shown to be suboptimal when the cost of information acquisition is sufficiently small.
(This abstract was borrowed from another version of this item.)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
- Timothy J. Feddersen & Wolfgang Pesendorfer, 1995.
"The Swing Voter's Curse,"
1064, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Timothy Feddersen & Wolfgang Pesendorfer, 1994.
"Voting Behavior and Information Aggregation in Elections with Private Information,"
1117, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- 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.
- Timothy Feddersen & Wolfgang Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections With Private Information," Levine's Working Paper Archive 1560, David K. Levine.
- Dirk Bergemann & Juuso Vaimaki, 2000.
"Information Acquisition and Efficient Mechanism Design,"
Cowles Foundation Discussion Papers
1248, Cowles Foundation for Research in Economics, Yale University.
- Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
- Hao Li & Sherwin Rosen & Wing Suen, 2000.
"Conflicts and Common Interests in Committees,"
Econometric Society World Congress 2000 Contributed Papers
0341, Econometric Society.
- Roger B. Myerson, 1984.
"Multistage Games with Communication,"
590, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Dino Gerardi & Leeat Yariv, 2007.
"Information Acquisition in Committees,"
Cowles Foundation Discussion Papers
1411R, Cowles Foundation for Research in Economics, Yale University.
- Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Wiley Blackwell, vol. 71(1), pages 165-191, 01.
- Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-57, November.
- Hao Li, 2001. "A Theory of Conservatism," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 617-636, June.
- César Martinelli, 2004.
"Would Rational Voters Acquire Costly Information?,"
122247000000000593, UCLA Department of Economics.
- Kaushik Mukhopadhaya, 2003. "Jury Size and the Free Rider Problem," Journal of Law, Economics and Organization, Oxford University Press, vol. 19(1), pages 24-44, April.
- Milgrom, Paul R, 1981. "Rational Expectations, Information Acquisition, and Competitive Bidding," Econometrica, Econometric Society, vol. 49(4), pages 921-43, June.
- McAfee, R Preston & Reny, Philip J, 1992. "Correlated Information and Mechanism Design," Econometrica, Econometric Society, vol. 60(2), pages 395-421, March.
- Nicola Persico, 2000.
"Information Acquisition in Auctions,"
Econometric Society, vol. 68(1), pages 135-148, January.
When requesting a correction, please mention this item's handle: RePEc:cla:najeco:122247000000000311. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David K. Levine)
If references are entirely missing, you can add them using this form.