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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| Veröffentlicht in: | Theoretical economics 2020-07, Vol.15 (3), p.923-954 |
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| container_title | Theoretical economics |
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| creator | Erlanson, Albin Kleiner, Andreas |
| description | 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. |
| doi_str_mv | 10.3982/TE3101 |
| format | Article |
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| ispartof | Theoretical economics, 2020-07, Vol.15 (3), p.923-954 |
| issn | 1555-7561 1933-6837 1555-7561 |
| language | eng |
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| source | Wiley Online Library Journals; Wiley_OA刊; Free E-Journal (出版社公開部分のみ） |
| subjects | Acquisitions & mergers Agents Chief executive officers Collective decision costly verification Costs D71 D82 Economic theory Efficiency Equilibrium Expected utility Incentives Information control Verification Voting |
| title | Costly verification in collective decisions |
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