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Decision making in committees: transparency, reputation and voting rules

  • Gilat Levy

In this paper I analyze the effect of the transparency of the decision making process in committees on the decisions that are eventually taken. I focus on committees whose members are motivated by career concerns, so that each member tries to enhance his own reputation. When the decision making process is secretive, the individual votes of the committee members are not exposed to the public but only the final decision. Thus, individuals are evaluated according to the group's decision. I find that in such a case, group members are induced to comply with preexisting biases. For example, if the voting rule demands a supermajority to accept a reform, individuals vote more often against reforms and exacerbate the conservatism of the voting rule. When the decision making process becomes transparent and individual votes are observed, this effect disappears and such committees are then more likely to accept reforms. I also find that coupled with the right voting rule, a secretive procedure may induce better decisions than a transparent one.

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File URL: http://eprints.lse.ac.uk/543/
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 543.

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Length: 28 pages
Date of creation: 16 Nov 2005
Date of revision:
Handle: RePEc:ehl:lserod:543
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Web page: http://www.lse.ac.uk/
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  1. John Fingleton, 2005. "Career Concerns of Bargainers," Journal of Law, Economics and Organization, Oxford University Press, vol. 21(1), pages 179-204, April.
  2. Daniel Seidmann, 2006. "Optimal Quotas in Private Committees," Discussion Papers 2006-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. Bengt Holmstrom, 1999. "Managerial Incentive Problems: A Dynamic Perspective," NBER Working Papers 6875, National Bureau of Economic Research, Inc.
  4. David Austen-Smith & Tim Feddersen, 2002. "Deliberation and Voting Rules," Discussion Papers 1359, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Levy, Gilat, 2004. "Anti-herding and strategic consultation," European Economic Review, Elsevier, vol. 48(3), pages 503-525, June.
  6. Anne Sibert, 2003. "Monetary Policy Committees: Individual and Collective Reputations," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 649-665.
  7. Anne Sibert, 1999. "Monetary Policy Committees: Individual and Collective Reputations," CESifo Working Paper Series 226, CESifo Group Munich.
  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. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Wiley Blackwell, vol. 71(1), pages 165-191, 01.
  10. Prat, Andrea, 2003. "The Wrong Kind of Transparency," CEPR Discussion Papers 3859, C.E.P.R. Discussion Papers.
  11. Daniel Seidmann, 2006. "Optimal Quotas in Private Committees," Discussion Papers 2006-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  12. Trueman, Brett, 1994. "Analyst Forecasts and Herding Behavior," Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 97-124.
  13. Timothy Feddersen & Wolfgang Pesendorfer, 1996. "Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts," Discussion Papers 1170, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  14. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 165-191.
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