Costly Verification in Collective Decisions
Albin Erlanson and
Andreas Kleiner ()
Papers from arXiv.org
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.
Date: 2019-10, Revised 2020-02
New Economics Papers: this item is included in nep-cdm, nep-des, nep-mic and nep-upt
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Journal Article: Costly verification in collective decisions (Forthcoming)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1910.13979
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