Costly verification in collective decisions

Artikel

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 15 ; Year: 2020 ; Issue: 3 ; Pages: 923-954 ; New Haven, CT: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Social Choice; Clubs; Committees; Associations
• Subject: Collective decision ; costly verification

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Erlanson, Albin ; Kleiner, Andreas
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New Haven, CT
• (when): 2020

Further information

• DOI: doi:10.3982/TE3101
• Handle: http://hdl.handle.net/10419/253454
• Last update: 10.03.2025, 11:46 AM CET