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Costly Verification in Collective Decisions

Erlanson, Albin and Kleiner, Andreas (2020) 'Costly Verification in Collective Decisions.' Theoretical Economics, 15 (3). 923 - 954. ISSN 1933-6837

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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.

Item Type: Article
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 18 Nov 2019 13:05
Last Modified: 09 Oct 2020 15:15
URI: http://repository.essex.ac.uk/id/eprint/25790

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