Working Paper: CEPR ID: DP6677
Authors: Hans Gersbach; Volker Hahn
Abstract: We study a two-period model of committee decision-making where members differ in their levels of efficiency. They may acquire costly information that enhances their ability to make a correct decision. We focus on the impact of transparency. We show that the principal's initial utility is higher under transparency, because members exert more effort, which makes correct decisions more likely. The principal also benefits from transparency later, unless transparency leads to an alignment of the signal qualities of highly efficient and less efficient committee members. In general, committee members are harmed by transparency.
Keywords: Career Concerns; Committees; Experts; Information Acquisition; Transparency
JEL Codes: D70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased transparency (G38) | Higher effort among committee members (D71) |
| Higher effort among committee members (D71) | Higher probability of correct decisions (D81) |
| Increased transparency (G38) | Higher principal's utility (D11) |
| Transparency improves decision-making quality (G38) | Higher principal's utility (D11) |
| Convergence in signal qualities (L15) | Potential dilution of ability to distinguish between member efficiencies (D79) |
| Increased effort required (D29) | Potential reduction in reappointment chances for committee members (D71) |
| Transparency increases intensity of information collection (D83) | Higher probabilities of correct outcomes (C52) |