Over-Caution of Large Committees of Experts

Rune Midjord, Tomás Rodríguez and Justin Valasek ()

Discussion Paper Series from The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem

Abstract: In this paper, we demonstrate that payoffs linked to a committee member's individual vote may explain over-cautious behavior in committees. A committee of experts must decide whether to approve or reject a proposed innovation on behalf of society. In addition to a payoff linked to the adequateness of the committee's decision, each expert receives a disesteem payoff if he/she voted in favor of an ill-fated innovation. An example is FDA committees, where committee members can be exposed to a disesteem (negative) payoff if they vote to pass a drug that proves to be fatal for some users. We show that no matter how small the disesteem payoffs are, information aggregation fails in large committees: under any majority rule, the committee rejects the innovation almost surely. We then show that this inefficiency can be mitigated by pre-vote information pooling, but only if the decision is take under unanimity: in the presence of disesteem payoffs, committee members will only vote efficiently if they are all responsible for the final decision.

Keywords: Committees; Information aggregation; Disesteem payoffs (search for similar items in EconPapers)
JEL-codes: D71 D72 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2013-12
New Economics Papers: this item is included in nep-cdm and nep-mic
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Related works:
Working Paper: Over-Caution of Large Committees of Experts (2014)
Working Paper: Over-caution of large committees of experts (2013)
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