Costly Verification in Collective Decisions
We study how a principal should optimally choose between implementing a new policy and maintaining the status quo when information relevant for the decision is privately held by agents. Agents are strategic in revealing their information; the principal cannot use monetary transfers to elicit this in...
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Zusammenfassung: | We study how a principal should optimally choose between implementing a new
policy and maintaining the status quo when information relevant for the
decision is privately held by agents. Agents are strategic in revealing their
information; the principal cannot use monetary transfers to elicit this
information, but can verify an agent's claim at a cost. We characterize the
mechanism that maximizes the expected utility of the principal. This mechanism
can be implemented as a cardinal voting rule, in which agents can either cast a
baseline vote, indicating only whether they are in favor of the new policy, or
they make specific claims about their type. The principal gives more weight to
specific claims and verifies a claim whenever it is decisive. |
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DOI: | 10.48550/arxiv.1910.13979 |