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Costly Verification in Collective Decisions

Albin Erlanson and Andreas Kleiner ()

Papers from arXiv.org

Abstract: 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 and we exclude monetary transfers, but the principal can verify an agent's information 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.

New Economics Papers: this item is included in nep-cdm, nep-des, nep-mic and nep-upt
Date: 2019-10
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http://arxiv.org/pdf/1910.13979 Latest version (application/pdf)

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Journal Article: Costly verification in collective decisions (Forthcoming) Downloads
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