Information aggregation with continuum of types

We consider an information aggregation problem where a group of voters wants to make a `yes' or `no' decision over a single issue. Voters have state-dependent common preferences, but hold possibly conflicting private information about the state in the form of types (signals). We assume that types are distributed from a state-dependent continuous distribution. In this model, Bayesian equilibrium voting and efficient voting coincide, and informative voting means that a voter votes in favor of the issue if and only if the signal exceeds a cut-point level. Our main result is an answer, in the form of a condition on the parameters of the model, to the question when informative voting is efficient

Information and Voting: the Wisdom of the Experts versus the Wisdom of the Masses

In a common-values election with continuously distributed information quality, the incentive to pool private information conflicts with the swing voters curse. In equilibrium, therefore, some citizens abstain despite clear private opinions, and others vote despite having arbitrarily many peers with superior information. The dichotomy between one's own and others' information quality can explain the otherwise puzzling empirical relationship between education and turnout, and suggests the importance of relative information variables in explaining turnout, which I verify for U.S. primary elections. Though voluntary elections fail to utilize nonvoters' information, mandatory elections actually do worse; e¤orts to motivate turnout may actually reduce welfare.

The Value of Information in the Court. Get it Right, Keep it Tight

We estimate an equilibrium model of decision-making in the US Supreme Court which takes into account both private information and ideological differences between justices. We present a measure of the value of information in the court: the probability that a justice votes differently than what she would have voted for in the absence of case-specific information. Our results suggest a sizable value of information: in roughly 44% of cases, justices' initial leanings are changed by their personal assessments of the case. Our results also confirm the increased politicization of the Supreme Court in the last quarter century. We perform counterfactual simulations to draw implications for institutional design

Subgroup deliberation and voting

We consider three mechanisms for the aggregation of information in heterogeneous committees voting by Unanimity rule: Private Voting and voting preceded by either Plenary or Subgroup Deliberation. While the first deliberation protocol imposes public communication, the second restricts communication to homogeneous subgroups. We find that both protocols allow to Pareto improve on outcomes achieved under private voting. Furthermore, we find that when focusing on simple equilibria under Plenary Deliberation, Subgroup Deliberation Pareto improves on outcomes achieved under Plenary Deliberation

The Value of Information in the Court: Get It Right, Keep It Tight

We estimate an equilibrium model of decision making in the US Supreme Court that takes into account both private information and ideological differences between justices. We measure the value of information in the court by the probability that a justice votes differently from how she would have voted without case-specific information. Our results suggest a sizable value of information: in 44 percent of cases, justices' initial leanings are changed by their personal assessments of the case. Our results also confirm the increased politicization of the Supreme Court in the last quarter century. Counterfactual simulations provide implications for institutional design

Informative voting and condorcet jury theorems with a continuum of types

We consider a model of information aggregation in which there are two possible states of the world and agents receive private signals from the set of probability measures over the binary state space - the unit interval. For a reasonably general set of signal densities, a unique symmetric Bayesian Nash equilibrium in responsive strategies exists and voting is informative in this equilibrium. Asymptotic analysis shows that society makes the correct decision almost surely as population size grows. In contrast to findings of Feddersen and Pesendorfer (1998) in the finite signal space case and Duggan and Martinelli (1999) in an alternative model in which the signal space is a continuum, this result holds for unanimity rule. The key to the efficiency of unanimity rule is that there are perfectly informative (or at least nearly perfectly informative) signals. A corollary to the asymptotic efficiency result is that for all rules the collective performs better than a single agent's dictatorship for large but finite populations. This need not be true for arbitrary population sizes.

Essays in Applied Microeconomics

This thesis consists of three independent chapters, each covering a significant research field in applied microeconomics. Chapter 1: We study a model of managerial incentive problems where a manager chooses the first two moments of his firm's profit distribution --mean and volatility-- along an efficient frontier. Assuming that managers differ with respect to their marginal cost of effort and their risk aversion we explore our model's comparative statics predictions in full detail. If managers' preference parameters are commonly known and associated, then a positive correlation between expected returns, volatility of profits, and incentives is the natural outcome. Allowing in addition for adverse selection with respect to the managers' preference parameters does not change the predicted correlation if the variation in observed contracts is not too large. Moreover, observed incentive schemes reflect exclusion of some manager types. Neglecting the endogeneity of risk in empirical studies biases estimates towards zero. Chapter 2: We consider three mechanisms for the aggregation of information in heterogeneous committees voting by Unanimity rule: Private Voting and voting preceded by either Plenary or Subgroup Deliberation. While the first deliberation protocol imposes public communication, the second restricts communication to homogeneous subgroups. We find that both protocols allow to Pareto improve on outcomes achieved under private voting. Furthermore, we find that when focusing on simple equilibria under Plenary Deliberation, Subgroup Deliberation Pareto improves on outcomes achieved under Plenary Deliberation. Chapter 3: We investigate why countries that produce polluting and exhaustible resources might overstate their reserves as claimed by empirical studies. We answer this question in a theoretical setup in which a delayed environmental regulation --in order to reflect slow international negotiations-- is implemented by a Pigovian tax. The regulator aims to control environmental damages caused by CO2 emissions from fossil-fuel combustion by not neglecting the social welfare from its usage. Information on the size of the reserves --low or high-- is the resource owner's private information. We find that the threat of carbon regulation creates incentives to exaggerate the size of the reserves. This behavior does not have to be detrimental to future environmental regulation. Both parties, the resource owner who wants to maximize his profits and the social planner who wants to control environmental pollution, can profit from asymmetric information