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Committee Design with Endogenous Participation

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  • Volker Hahn

    () (Department of Economics, University of Konstanz, Germany)

Abstract

We investigate the optimal design of a committee in a model with the endogenous participation of experts who have private information about their own abilities. We study three different dimensions of committee design: members' wages, the number of seats, and the communication system. We show that, surprisingly, higher wages lead to lower quality experts. By contrast, transparency improves the quality of experts on the committee. We provide a complete characterization of optimal committees. They are characterized by low wages and can be transparent or opaque. An increase in the significance of the decision requires a larger optimal committee, but does not call for different wages or for another communication system. Finally, we prove that the optimal committee design represents the best possible mechanism for the principal.

Suggested Citation

  • Volker Hahn, 2013. "Committee Design with Endogenous Participation," Working Paper Series of the Department of Economics, University of Konstanz 2013-12, Department of Economics, University of Konstanz.
  • Handle: RePEc:knz:dpteco:1312
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    References listed on IDEAS

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    Cited by:

    1. Belke, Ansgar, 2017. "Central bank communication: Managing expectations through the monetary dialogue," Ruhr Economic Papers 692, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    Keywords

    Committee decision-making; information aggregation; adverse selection; efficiency wages; transparency; career concerns;

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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