Multiple solutions under quasi-exponential discountingReport as inadecuate

Multiple solutions under quasi-exponential discounting - Download this document for free, or read online. Document in PDF available to download.

1 GREGH - Groupement de Recherche et d-Etudes en Gestion à HEC 2 Department of Economics, Ecole Polytechnique 3 SSE - Department of Economics

Abstract : We consider a group or committee that faces a binary decision under uncertainty. Each member holds some private information. Members agree which decision should be taken in each state of nature, had this been known, but they may attach different values to the two types of mistake that may occur. Most voting rules have a plethora of uninformative equilibria, and informative voting may be incompatible with equilibrium. We analyze an anonymous randomized majority rule that has a unique equilibrium. This equilibrium is strict, votes are informative, and the equilibrium implements the optimal decision with probability one in the limit as the committee size goes to infinity. We show that this also holds for the usual majority rule under certain perturbations of the behavioral assumptions: i a slight preference for voting according to one-s conviction, and ii transparency and a slight preference for esteem. We also show that a slight probability for voting mistakes strengthens the incentive for informative voting.

Keywords : uniqueness : time-consistency hyperbolic discounting stochastic dynamic programming multiplicity uniqueness.

Author: Nicolas Vieille - Jörgen Weibull -



Related documents