Working Paper: CEPR ID: DP15311
Authors: Hans Gersbach; Akaki Mamageishvili; Oriol Tejada
Abstract: A population of identical individuals must choose one of two alternatives under uncertainty about what the right alternative is. Individuals can gather information of increasing accuracy at an increasing convex utility cost. For such a setup, we analyze how vote delegation to a committee and suitable monetary transfers for its members can ensure that high or optimal levels of information are (jointly) acquired. Our main insight is that to maximize the probability of choosing the right alternative committee size must be small, no matter whether information acquisition costs are private or not. Our analysis and results cover two polar cases--information costs are either private or public--and unravel both the potential and the limitations of monetary transfers in committee design.
Keywords: voting; committee; cost sharing; information acquisition; reward scheme; monetary transfers; majority rule
JEL Codes: C72; D71; D8
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| committee size (D71) | probability of selecting the correct alternative (C52) |
| small committee size (D71) | likelihood of individual members being pivotal (D79) |
| optimal committee size can be one (D71) | highest probability of implementing the right alternative (C52) |
| larger committees (D72) | less effective at ensuring the correct alternative is chosen (C52) |
| appropriate reward schemes (J33) | high levels of information acquisition (D83) |
| rewards conditioned on voting patterns (D72) | motivate committee members to gather information (D71) |