Conflicts and Common Interests in Committees

49 Pages Posted: 13 Jul 2000 Last revised: 23 Jan 2022

See all articles by Li Hao

Li Hao

University of Hong Kong

Sherwin Rosen

University of Chicago (Deceased)

Wing Suen

The University of Hong Kong - School of Economics and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: June 1999

Abstract

Committees improve decisions by pooling independent information of members, but promote manipulation, obfuscation, and exaggeration of private evidence when members have conflicting preferences. We study how self-interest mediates these conflicting forces. When members' preferences differ, no person ever submits a report that allows perfect inference of his private information. Instead, equilibrium strategies are many-to-one mappings that transform continuous data into ordered ranks: voting procedures are the equilibrium methods of achieving a consensus in committees. Voting necessarily coarsens the transmission of information among members, but is necessary to control conflicts of interest. The degree of coarseness of the equilibrium voting procedure is determined by the extent of conflicting preferences. Though self-interests necessarily reduce the efficient use of information in committees, real information sharing occurs nonetheless. Committees make better decisions on behalf of the average' (Pareto weighted) member than would any individual on the basis of own information. Committees are viable, though imperfect ways of making decisions when information is dispersed among members.

Suggested Citation

Hao, Li and Rosen, Sherwin and Suen, Wing C., Conflicts and Common Interests in Committees (June 1999). NBER Working Paper No. w7158, Available at SSRN: https://ssrn.com/abstract=227348

Li Hao (Contact Author)

University of Hong Kong ( email )

8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong

Sherwin Rosen

University of Chicago (Deceased)

Wing C. Suen

The University of Hong Kong - School of Economics and Finance ( email )

8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong
852 2859 1052 (Phone)
852 2548 1152 (Fax)