Information Acquisition and Transparency in Committees
36 Pages Posted: 17 Jan 2008 Last revised: 29 Sep 2010
Date Written: July 2010
We study an intertemporal model of committee decision-making where members differ in their levels of efficiency. They may acquire costly information that enhances their ability to make a correct decision. We focus on the impact of transparency. We show that the principal’s initial utility is higher under transparency, because members exert more effort, which makes correct decisions more likely. The principal also benefits from transparency later, unless transparency leads to an alignment of the signal qualities of highly efficient and less efficient committee members. In general, committee members are harmed by transparency. Together with the insights from the literature, our results may help to decide when transparency in committees is desirable.
Keywords: committees, career concerns, experts, transparency, information acquisition
JEL Classification: D71
Suggested Citation: Suggested Citation