When two experts are better than one: The example of shareholder voting

Berno Buechel, Lydia Mechtenberg and Alexander Wagner
Authors registered in the RePEc Author Service: Berno Büchel

No 17413, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Introducing a single expert's advice before a vote can diminish its informational efficiency. We show that when two independent experts are involved, the opposite occurs: informational efficiency increases. We model expert advice, individual information acquisition, and voting in common-interest scenarios, using proxy advice and shareholder voting as the primary example. Adding a second expert enhances decision quality under two plausible assumptions: the first expert holds superior information compared to individual voters, and the second expert's advice is timely. When the second expert challenges the first's proposal, voters are prompted to conduct their own inquiries, resulting in better-informed decisions and reducing the likelihood of correlated errors. These findings hold implications for collective decision-making across various organizational settings.

Keywords: Collective decision-making; Information acquisition; Proxy advisors; Strategic voting (search for similar items in EconPapers)
JEL-codes: D72 D83 G23 (search for similar items in EconPapers)
Date: 2022-06
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