Working Paper: CEPR ID: DP15324
Authors: Kfir Eliaz; Ran Eilat
Abstract: We consider the problem faced by a group of players who need to collectively decide what public signal to acquire, and how to share its cost, before voting on whether to take some action, when each player is privately informed about his state-dependent payoffs from the action. We characterize the welfare maximizing mechanism for information acquisition taking into account the subsequent voting game. We identify novel distortions that arise from the information asymmetry and from the fact that after observing the signal realization, the players vote independently of their actions in the mechanism.
Keywords: Collective Decision-Making; Mechanism Design; Information Design; Rational Inattention; Public Good Provision
JEL Codes: D72; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| welfare maximizing mechanism for acquiring information (D82) | cost of the signal (L96) |
| cost of the signal (L96) | voting behavior (D72) |
| signal acquisition (C87) | social surplus (D69) |
| information asymmetry (D82) | underprovision of information (D83) |
| signal realization (C53) | voting behavior (D72) |
| private information (D82) | willingness to pay for information (D83) |
| acquired signal (C58) | confidence in voting (K16) |