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Committee Design with Endogenous Participation

Listed author(s):
  • Volker Hahn

    ()

    (Department of Economics, University of Konstanz, Germany)

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.

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File URL: http://www.uni-konstanz.de/FuF/wiwi/workingpaperseries/WP_12-Hahn_2013.pdf
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Paper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2013-12.

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Length: 36 pages
Date of creation: 12 Jun 2013
Handle: RePEc:knz:dpteco:1312
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