Gershkov, A.; Szentes, B.; (2009) Optimal voting schemes with costly information acquisition. (ELSE Working Papers 325). ESRC Centre for Economic Learning and Social Evolution: London, UK.

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Abstract

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 optimal mechanism is shown to be sequential. 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. The ex-ante optimal voting scheme among the ex-post efficient ones is characterized. 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. It is also shown that if the cost of information acquisition is small, then the ex-ante optimal mechanism is sometimes necessarily ex-post inefficient.

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