Centre for Development Economics
and
Department of Economics, Delhi School of Economics
ANNOUNCE A SEMINAR
Professional Advice from
Randomly Transparent Committees
by
Saptarshi Ghosh
University of Birmingham
Thursday, August 9, 2012 at 3:00 p.m.
Venue : AMEX Conference Room (Second Floor)
Department of Economics, Delhi School of Economics
All are cordially invited
Abstract
This paper studies voting behaviour of careerist experts (who have expertise in three independent and equally important dimensions) in a secret committee where voting pro les get `leaked’ to the public with an exogenously given probability. We focus on informative voting, where every expert votes in accordance to his privately formed posterior probability and social welfare, which is the ex-ante gain of the society from a correct decision in every dimension. We show that for informative voting to be obtained as an equilibrium outcome, it is important that the committee uses the unanimity voting rule along with an intermediate probability of transparency provided that the common prior is not too informative. We then show that no committee that enforces informative voting can maximise social welfare (from the decision recommended by the committee), that is, informative voting and welfaremaximisation are mutually exclusive properties. Moreover, within the class of unanimous committees, randomness of transparency is never socially desirable so that either a fully transparent or a fully secretive committee is required under the unanimity voting rule in order to maximise welfare. We also show that with a low prior (the case where expert committees are most valuable to the society), a committee using the majority rule and operating with full transparency is better for the society than any unanimous committee.
Keywords: Random Transparency, Career Concerns, Informative Voting, Welfare.
JEL Classi fiers: D02, D71, D80.