Collective decisions with interdependent valuations

Hans Peter Grüner and Alexandra Kiel ()
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Hans Peter Grüner: Department of Economics, University of Mannheim, IZA, Bonn and CEPR, London
Alexandra Kiel: Department of Economics, University of Mannheim

GK working paper series from Post Graduate Programme "Allocation on Financial Markets", University of Mannheim

Abstract: Many collective decision problems have the common feature that individuals' desired outcomes are correlated but not identical. This paper studies collective decisions with private information about these desired policies. Each agent holds private information which mainly concerns his own bliss point, but this private information also affects all other agents' bliss points. We concentrate on two specific mechanisms, the mean and the median mechanism. We establish existence of two symmetric Bayesian Nash equilibria of the corresponding game and compare the performance of the mechanisms for different degrees of interdependencies. Applications of our framework include the assignment of voting rights in the council of the European Central Bank, the design of decision processes in teams, firms, and international organizations.

Keywords: collective decisions; asymmetric information; interdependent valuations (search for similar items in EconPapers)
JEL-codes: D78 D82 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2001-05, Revised 2001-09
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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