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Sequential Aggregation of Verifiable Information

We introduce the notion of verifiable information into a model of sequential debate among experts who are motivated by career concerns. We show that self-censorship may hamper the efficiency of information aggregation, as experts withhold evidence contradicting the conventional wisdom. In this case, silence is telling and undermines the prevailing view over time if this view is incorrect. As a result, withholding arguments about the correct state of the world is only a temporary phenomenon, and the probability of the correct state of the world being revealed always converges to one as the group of experts becomes large. For small groups, a simple mechanism the principal can use to improve decisionmaking is to appoint a devil’s advocate.

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Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 10/136.

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Length: 43 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:eth:wpswif:10-136
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  1. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November.
  2. Masahiro Okuno-Fujiwara & Andrew Postlewaite & Kotaro Suzumura, 1990. "Strategic Information Revelation," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 25-47.
  3. Jerome Mathis, 2006. "Deliberation with Partially Verifiable Information," THEMA Working Papers 2006-03, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  4. 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.
  5. Gersbach, Hans & Keil, Marten, 2004. "Productivity Improvements in Public Organizations," CEPR Discussion Papers 4469, C.E.P.R. Discussion Papers.
  6. Wit, Jorgen, 1998. "Rational Choice and the Condorcet Jury Theorem," Games and Economic Behavior, Elsevier, vol. 22(2), pages 364-376, February.
  7. Mathias Dewatripont & Jean Tirole, 2005. "Modes of communication," ULB Institutional Repository 2013/9631, ULB -- Universite Libre de Bruxelles.
  8. Wolinsky, Asher, 2003. "Information transmission when the sender's preferences are uncertain," Games and Economic Behavior, Elsevier, vol. 42(2), pages 319-326, February.
  9. Scharfstein, David. & Stein, Jeremy C., 1988. "Herd behavior and investment," Working papers WP 2062-88., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  10. F. Forges & Frederic Koessler, 2003. "Communication Equilibria with Partially Verifiable Types," THEMA Working Papers 2003-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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  12. Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
  13. Bauke Visser & Otto H. Swank, 2007. "On Committees of Experts," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 337-372.
  14. Glazer, Jacob & Rubinstein, Ariel, 1998. "Motives and Implementation: On the Design of Mechanisms to Elicit Opinions," Journal of Economic Theory, Elsevier, vol. 79(2), pages 157-173, April.
  15. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
  16. Battaglini, Marco, 2004. "Sequential Voting with Abstention," Papers 05-19-2004, Princeton University, Research Program in Political Economy.
  17. Dekel, E. & Piccione, M., 1999. "Sequential Voting Procedures in Symmetric Binary Elections," Papers 3-99, Tel Aviv.
  18. Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
  19. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
  20. Giovannoni, Francesco & Seidmann, Daniel J., 2007. "Secrecy, two-sided bias and the value of evidence," Games and Economic Behavior, Elsevier, vol. 59(2), pages 296-315, May.
  21. Sanford Grossman & Oliver Hart, . "Disclosure Laws and Takeover Bids," Rodney L. White Center for Financial Research Working Papers 23-79, Wharton School Rodney L. White Center for Financial Research.
  22. Mathias Dewatripont & Patrick Bolton, 2005. "Contract theory," ULB Institutional Repository 2013/9543, ULB -- Universite Libre de Bruxelles.
  23. Hahn, Volker, 2008. "Committees, sequential voting and transparency," Mathematical Social Sciences, Elsevier, vol. 56(3), pages 366-385, November.
  24. S. Ali & Navin Kartik, 2012. "Herding with collective preferences," Economic Theory, Springer, vol. 51(3), pages 601-626, November.
  25. 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.
  26. repec:rje:randje:v:37:y:2006:1:p:155-175 is not listed on IDEAS
  27. Marco Ottaviani & Peter Norman Sørensen, 2006. "Reputational cheap talk," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 155-175, 03.
  28. Hahn, Volker & Gersbach, Hans, 2001. "Should the Individual Voting Records of Central Bankers be Published?," Discussion Paper Series 1: Economic Studies 2001,02, Deutsche Bundesbank, Research Centre.
  29. Elisabeth Schulte, 2010. "Information aggregation and preference heterogeneity in committees," Theory and Decision, Springer, vol. 69(1), pages 97-118, July.
  30. H.S. Shin, 1994. "News Management and the Value of Firms," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 58-71, Spring.
  31. 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.
  32. Ben-Yashar, Ruth C & Nitzan, Shmuel I, 1997. "The Optimal Decision Rule for Fixed-Size Committees in Dichotomous Choice Situations: The General Result," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 175-86, February.
  33. Lipman Barton L. & Seppi Duane J., 1995. "Robust Inference in Communication Games with Partial Provability," Journal of Economic Theory, Elsevier, vol. 66(2), pages 370-405, August.
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