Information Aggregation with Costly Reporting

Martin Osborne, Jeffrey S Rosenthal and Colin Stewart

The Economic Journal, 2020, vol. 130, issue 625, 208-232

Abstract: A group of privately informed individuals with common interests chooses a binary option. Each individual chooses whether to reveal her signal, at a cost. If the group is large and cannot commit to a decision rule then it takes the correct decision with high probability in one state but with probability bounded away from one in the other. It cannot do better by committing to an anonymous decision rule without transfers, but can achieve the first best if transfers between individuals are possible, and can approximately achieve the first best with a non-anonymous decision rule.

Date: 2020
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Working Paper: Information aggregation with costly reporting (2016)
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