DP15324 Collective Information Acquisition

Author(s): Ran Eilat, Kfir Eliaz
Publication Date: September 2020
Keyword(s): collective decision-making, Information-design, Mechanism-Design, Public Good Provision, rational inattention
JEL(s):
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15324

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.