Committee Design in the Presence of Communication

43 Pages Posted: 17 Mar 2003

See all articles by Dino Gerardi

Dino Gerardi

Yale University - Cowles Foundation

Leeat Yariv

Princeton University

Date Written: March 2003

Abstract

The goal of this paper is to introduce communication in a collective choice environment with information acquisition. We concentrate on decision panels that are comprised of agents sharing a common goal and having a joint task. Members of the panel decide whether to acquire costly information or not, preceding the communication stage. We take a mechanism design approach and consider a designer who can choose the size of the decision panel, the procedure by which it selects the collective choice, and the communication protocol by which its members abide prior to casting their individual action choices. We characterize the solution of this extended design problem. We find that the optimal communication protocol in such an environment balances a tradeoff between inducing players to acquire information and extracting the maximal amount of information from them. In particular, the optimal device may lead to suboptimal aggregation of information from a statistical point of view. Furthermore, groups producing the optimal collective decisions are bounded in size. Comparative statics results shed light on the regularities the design solution exhibits. For example, the expected utility of all agents decreases with the cost of private information and increases with its accuracy, but the optimal panel size is not monotonic in the signals' accuracy.

Keywords: Communication, Collective Choice, Mechanism Design, Strategic Voting, Information Acquisition

JEL Classification: D71, D72, D78

Suggested Citation

Gerardi, Dino and Yariv, Leeat, Committee Design in the Presence of Communication (March 2003). Cowles Foundation Discussion Paper No. 1411. Available at SSRN: https://ssrn.com/abstract=387780

Dino Gerardi (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-3562 (Phone)
203-432-5779 (Fax)

Leeat Yariv

Princeton University ( email )

Princeton, NJ 08544-1021
United States

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