Optimal voting schemes with costly information acquisition

TLDR: It is shown that, of all mechanisms, a sequential one is optimal and works as follows: one agent at a time is selected to acquire information and report the resulting signal and the restriction to ex-post efficiency is shown to be without loss when the available signals are sufficiently imprecise.

About: This article is published in Journal of Economic Theory.The article was published on 2009-01-01 and is currently open access. It has received 96 citations till now. The article focuses on the topics: Optimal decision.

Frequently asked questions

Q1. What are the contributions in "Optimal voting schemes with costly information acquisition∗" ?

This paper analyzes a voting model where ( i ) there is no conflict of interest among the voters, and ( ii ) information acquisition is costly and unobservable. The social planner asks, at random, one voter at a time to invest in information and to report the resulting signal. Voters are informed of neither their position in the sequence nor the reports of previous voters. Obeying the planner by investing and reporting truthfully is optimal for voters. In this scheme, the social planner stops aggregating information and makes a decision when the precision of his posterior exceeds a cut-off which decreases with each additional report. 

Q2. What is the effect of the ex-ante optimal mechanism?

The authors also show that, if the cost of information acquisition is small, then, surprisingly, the ex-ante optimal mechanism is often ex-post inefficient. 

Q3. What is the way to improve the optimal ex-post efficient mechanism?

It will be shown that if the cost of information acquisition is small enough, then the optimal ex-post efficient mechanism can be improved upon by replacing a continuation mechanism with an ex-post inefficient continuation mechanism. 

Q4. What is the probability that the deviator is asked to report a signal?

Since the SP orders the voters independently of the realizations of the signals,p (A ∩B) = p (s) 2i+ d N ,where (2i+ d) /N is the probability that the deviator is asked to report a signal if a decision is made after a sequence with length 2i+d. 

Q5. What is the argument that the first-best mechanism is not incentive compatible?

The authors argue that for given p and c, there always exists a k0 ∈ N such that the mechanism is not incentive compatible if the SP stops asking voters only if |d| ≥ k0.