The role of regional information in the optimal composition of a committee

We analyse the optimal composition of a federal or supra-national committee. The representation of regional (national) entities in federal committees is typically motivated by their superior knowledge of local conditions. Using this argument, we formally model the optimal composition of a committee. Our results indicate that a region's representation in a federal committee depends on its ability to reduce uncertainty about the state of the economy. Furthermore, correlation of regional uncertainty increases the value of information. This induces synergy effects, which result in higher optimal representation in the committee.