DP15311 Appointed Learning for the Common Good: Optimal Committee Size and Efficient Rewards
|Author(s):||Hans Gersbach, Akaki Mamageishvili, Oriol Tejada|
|Publication Date:||September 2020|
|Keyword(s):||Voting - Committee - Cost sharing - Information acquisition - Reward scheme - Monetary transfers - Majority rule|
|JEL(s):||C72, D71, D8|
|Programme Areas:||Public Economics, Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=15311|
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.