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Why a Group Needs a Leader: Decision-making and Debate in Committees

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  • Dessein, Wouter

Abstract

I develop a model of group decision-making, in which a committee generates proposals and holds open discussions, but the ultimate decision is either taken by a leader (decision by authority) or by majority vote. Optimal communication processes are studied that combine both cheap talk statements (proposals) and costly state verification (discussions). I show that by favouring one particular agent ? the leader ? authoritative decision-making reduces rent-seeking discussions and often results in a higher decision-quality relative to majority decision-making. Institutions which guarantee a "right to voice" by separating the roles of decision maker and discussion leader may further improve efficiency.

Suggested Citation

  • Dessein, Wouter, 2007. "Why a Group Needs a Leader: Decision-making and Debate in Committees," CEPR Discussion Papers 6168, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6168
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    References listed on IDEAS

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    1. Gilat Levy, 2007. "Decision Making in Committees: Transparency, Reputation, and Voting Rules," American Economic Review, American Economic Association, vol. 97(1), pages 150-168, March.
    2. Bernard Caillaud & Jean Tirole, 2007. "Consensus Building: How to Persuade a Group," American Economic Review, American Economic Association, vol. 97(5), pages 1877-1900, December.
    3. Vijay Krishna & John Morgan, 2001. "A Model of Expertise," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 747-775.
    4. Eric Van den Steen, 2005. "Organizational Beliefs and Managerial Vision," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 21(1), pages 256-283, April.
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    6. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    7. Wouter Dessein, 2002. "Authority and Communication in Organizations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 811-838.
    8. Ottaviani, Marco & Sorensen, Peter, 2001. "Information aggregation in debate: who should speak first?," Journal of Public Economics, Elsevier, vol. 81(3), pages 393-421, September.
    9. Milgrom, Paul & Roberts, John, 1990. "The Efficiency of Equity in Organizational Decision Processes," American Economic Review, American Economic Association, vol. 80(2), pages 154-159, May.
    10. Ricardo Alonso & Wouter Dessein & Niko Matouschek, 2008. "When Does Coordination Require Centralization?," American Economic Review, American Economic Association, vol. 98(1), pages 145-179, March.
    11. Bauke Visser & Otto H. Swank, 2007. "On Committees of Experts," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(1), pages 337-372.
    12. Nicola Persico, 2004. "Committee Design with Endogenous Information," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(1), pages 165-191.
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    Cited by:

    1. Morvarid Rahmani & Guillaume Roels & Uday S. Karmarkar, 2018. "Team Leadership and Performance: Combining the Roles of Direction and Contribution," Management Science, INFORMS, vol. 64(11), pages 5234-5249, November.
    2. Otto H. Swank & Bauke Visser, 2007. "Is Transparency to no avail? Committee Decision-making, Pre-meetings, and Credible Deals," Tinbergen Institute Discussion Papers 07-055/1, Tinbergen Institute.
    3. Graham, John R. & Harvey, Campbell R. & Puri, Manju, 2015. "Capital allocation and delegation of decision-making authority within firms," Journal of Financial Economics, Elsevier, vol. 115(3), pages 449-470.
    4. Spinnewijn, Johannes & Campbell, Arthur & Ederer, Florian, 2011. "Time to Decide: Information Search and Revelation in Groups," CEPR Discussion Papers 8531, C.E.P.R. Discussion Papers.
    5. Nana Adrian & Marc M ller, 2019. "Partnerships with Asymmetric Information: The Benefit of Sharing Equally amongst Unequals," Diskussionsschriften dp1904, Universitaet Bern, Departement Volkswirtschaft.
    6. Johannes Spinnewijn & Florian Ederer & Arthur Campbell, 2011. "Information Search and Revelation in Groups," 2011 Meeting Papers 997, Society for Economic Dynamics.

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    More about this item

    Keywords

    Authority; Committees; Debate; Group decision-making; Leadership; Majority rule;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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