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 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 make specific claims about their type. The principal gives more weight to specific claims and verifies a claim whenever it is decisive.
Year of publication: |
2020
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Authors: | Erlanson, Albin ; Kleiner, Andreas |
Published in: |
Theoretical Economics. - The Econometric Society, ISSN 1933-6837, ZDB-ID 2220447-7. - Vol. 15.2020, 3, p. 923-954
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Publisher: |
The Econometric Society |
Saved in:
Online Resource
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