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Voting in Small Committees

We analyze the voting behavior of a small committee that has to approve or reject a proposal whose return is uncertain. Members have heterogenous preferences: some members want to maximize the expected value while other members have a bias toward project approval and ignore their private information. We analyze different voting games when information is costless and communication is not possible, and we provide insights on the optimal composition of these committees. Our main result is that the presence of biased members can improve the voting outcome by simplifying the strategies of unbiased members. Thus, committees with heterogeneous members can function at least as well as homogeneous committees and in some cases they perform better. In particular, when value-maximizing members hold 51% of votes, the socially optimal equilibrium becomes unique.

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Paper provided by Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa in its series Working Papers - Economics with number wp2011_01.rdf.

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Length: 24 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:frz:wpaper:wp2011_01.rdf
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  1. Kiel, Alexandra & Gerling, Kerstin & Schulte, Elisabeth & Grüner, Hans Peter, 2003. "Information acquisition and decision making in committees: a survey," Working Paper Series 0256, European Central Bank.
  2. Jung, Alexander, 2011. "An international comparison of voting by committees," Working Paper Series 1383, European Central Bank.
  3. Roger B. Myerson, 1994. "Extended Poisson Games and the Condorcet Jury Theorem," Discussion Papers 1103, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Duggan, John & Martinelli, Cesar, 2001. "A Bayesian Model of Voting in Juries," Games and Economic Behavior, Elsevier, vol. 37(2), pages 259-294, November.
  5. Piketty, Thomas, 1999. "The information-aggregation approach to political institutions," European Economic Review, Elsevier, vol. 43(4-6), pages 791-800, April.
  6. Morton, Rebecca B. & Tyran, Jean-Robert, 2011. "Let the experts decide? Asymmetric information, abstention, and coordination in standing committees," Games and Economic Behavior, Elsevier, vol. 72(2), pages 485-509, June.
  7. Renée B. Adams & Daniel Ferreira, 2007. "A Theory of Friendly Boards," Journal of Finance, American Finance Association, vol. 62(1), pages 217-250, 02.
  8. Harris, Mark & Spencer, Christopher, 2008. "Decade of dissent: explaining the dissent voting behavior of Bank of England MPC members," MPRA Paper 9100, University Library of Munich, Germany.
  9. Alessandro Riboni & Francisco J. Ruge-Murcia, 2008. "Preference Heterogeneity in Monetary Policy Committees," International Journal of Central Banking, International Journal of Central Banking, vol. 4(1), pages 213-233, March.
  10. Christopher Spencer, 2006. "The Dissent Voting Behaviour of Bank of England MPC Members," School of Economics Discussion Papers 0306, School of Economics, University of Surrey.
  11. Hongbin Cai, 2009. "Costly participation and heterogeneous preferences in informational committees," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 173-189.
  12. Timothy Feddersen & Wolfgang Pesendorfer, 1994. "Voting Behavior and Information Aggregation in Elections with Private Information," Discussion Papers 1117, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. Paolo Balduzzi & Clara Graziano & Annalisa Luporini, 2011. "Voting in Corporate Boards with Heterogeneous Preferences," CESifo Working Paper Series 3332, CESifo Group Munich.
  14. Timothy J. Feddersen & Wolfgang Pesendorfer, 1995. "The Swing Voter's Curse," Discussion Papers 1064, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Alan Blinder, 2006. "Monetary Policy by Committee: Why and How?," DNB Working Papers 092, Netherlands Central Bank, Research Department.
  16. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Wiley Blackwell, vol. 71(1), pages 165-191, 01.
  17. Asher Wolinsky, 1999. "Eliciting Information From Multiple Experts," Discussion Papers 1277, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  18. Jan Marc Berk & Beata K. Bierut, 2005. "On the Optimality of Decisions made by Hub-and-Spokes Monetary Policy Committees," DNB Working Papers 027, Netherlands Central Bank, Research Department.
  19. Raheja, Charu G., 2005. "Determinants of Board Size and Composition: A Theory of Corporate Boards," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(02), pages 283-306, June.
  20. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 165-191.
  21. Eckel, Catherine & Holt, Charles A, 1989. "Strategic Voting in Agenda-Controlled Committee Experiments," American Economic Review, American Economic Association, vol. 79(4), pages 763-73, September.
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