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Information Search and Revelation in Groups

Author

Listed:
  • Johannes Spinnewijn

    (LSE)

  • Florian Ederer

    (UCLA)

  • Arthur Campbell

    (Yale)

Abstract

We analyze costly information acquisition and information revelation in groups that evaluate different decision options in a dynamic setting. Even when team members have perfectly aligned interests the group may inefficiently delay decisions due to either insufficient information acquisition effort or due to the unwillingness of informed team members to reveal their information in an attempt to incentivize their co-workers to continue searching for information. Although deadlines can reduce costly delay, we show that, surprisingly, expected decision time is non-monotonic in the length of the deadline. The optimal deadline is unique and finite and incentivizes team members to intensely search for information while at same time minimizing any unnecessary delay in decision-making. As long as the deadline is set optimally, welfare is higher when information is only privately observable to the agent who obtained rather than to the entire group. We further explore how contracts, monitoring and third-party information intermediaries influence the actions of the group members.

Suggested Citation

  • Johannes Spinnewijn & Florian Ederer & Arthur Campbell, 2011. "Information Search and Revelation in Groups," 2011 Meeting Papers 997, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:997
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    File URL: https://economicdynamics.org/meetpapers/2011/paper_997.pdf
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    References listed on IDEAS

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    1. Gilat Levy, 2007. "Decision Making in Committees: Transparency, Reputation, and Voting Rules," American Economic Review, American Economic Association, vol. 97(1), pages 150-168, March.
    2. Ettore Damiano & Hao Li & Wing Suen, 2008. "Delay in Strategic Information Aggregation," Working Papers tecipa-311, University of Toronto, Department of Economics.
    3. Alessandro Bonatti & Johannes Horner, 2011. "Collaborating," American Economic Review, American Economic Association, vol. 101(2), pages 632-663, April.
    4. Jordi Blanes i Vidal & Marc Möller, 2013. "Decision–Making and Implementation in Teams," CEP Discussion Papers dp1208, Centre for Economic Performance, LSE.
    5. Nicola Persico, 2004. "Committee Design with Endogenous Information," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 165-191.
    6. Hongbin Cai, 2009. "Costly participation and heterogeneous preferences in informational committees," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 173-189.
    7. 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.
    8. Siew Hong Teoh, 1997. "Information Disclosure and Voluntary Contributions to Public Goods," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 385-406, Autumn.
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