Do We Need a Committee?

Abstract

We study committee design when a homogeneous community is uncertain about which alternative is correct, individuals can acquire costly information about the state of the world, and the decision must be taken via voting with the majority rule. We assume verifiability of costs and cost sharing, which are realistic assumptions in many applications, e.g. if the time spent in learning is determined or recorded, or if reports with a certain content have to be produced.  For a family of information cost functions, we show that the optimal committee size depends on the (local and global) properties of the cost function. If acquiring a bit of information is relatively cheap, the optimal committee typically comprises more than one member and three, or sometimes more, members are sufficient. In other cases, vote delegation to a single individual is optimal, and hence no committee is needed at all. Our results may rationalize the widespread use of small committees in politics and companies for  decision-making.

Keywords: voting, committee, information acquisition, monetary transfers, majority rule, incomplete social contracts