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Collective Decisions with Interdependent Valuations

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  • Grüner, Hans Peter
  • Kiel, Alexandra

Abstract

Many 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 that mainly concerns their 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.

Suggested Citation

  • Grüner, Hans Peter & Kiel, Alexandra, 2001. "Collective Decisions with Interdependent Valuations," CEPR Discussion Papers 3003, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3003
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    References listed on IDEAS

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    5. Gros Daniel & Hefeker Carsten, 2002. "One Size Must Fit All: National Divergences in a Monetary Union," German Economic Review, De Gruyter, vol. 3(3), pages 247-262, August.
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    7. Süppel, Ralph & von Hagen, Jürgen, 1994. "Central Bank Constitutions for Monetary Unions," CEPR Discussion Papers 919, C.E.P.R. Discussion Papers.
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    Citations

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    Cited by:

    1. Christian Fahrholz & Philipp Mohl, 2004. "EMU-enlargement and the Reshaping of Decision-making within the ECB Governing Council: A Voting-Power Analysis," Eastward Enlargement of the Euro-zone Working Papers wp23, Free University Berlin, Jean Monnet Centre of Excellence, revised 01 Jun 2004.

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    More about this item

    Keywords

    Collective decisions; Asymmetric information; Interdependent valuations;
    All these keywords.

    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

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