Committee Processes as Information Aggregation Mechanisms: Process Design and Experimental Results
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Committee Processes as Information Aggregation Mechanisms: Process Design and Experimental Results Morgan H. Llewellyn Charles R. Plott California Institute of Technology. Presented at the Lee Center Workshop May 2006. MARKETS AND PRICES ARE KNOWN TO BE INFORMATION VEHICLES

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Committee Processes as Information Aggregation Mechanisms: Process Design and Experimental Results

Morgan H. Llewellyn

Charles R. Plott

California Institute of Technology

Presented at the Lee Center Workshop May 2006


MARKETS AND PRICES ARE KNOWN TO BE INFORMATION VEHICLES Process Design and Experimental Results

Information held by insiders CAN get transmitted to outsiders.

CAN COMMITTEE PROCESSES, PROPOSALS AND VOTING BE INFORMATION VEHICLES?

Those who care have the right to vote but the information is held by special interests with no right to vote.

WHAT TYPE OF PROCESS CAN GET THE INFORMATION FROM THE INSIDERS TO THE OUTSIDERS?


SOMETHING HAPPENING? Process Design and Experimental Results

EVENTS

As the event unfolds signals and indicators are dispersed to different people. No isolated, individual signal is strong.

Information in the signals differs from the information in humans. Filtered by human observation, it exists subjectively as vague ideas, intuition and hunches.

PREDICTION ABOUT EVENTS

Information Aggregation Mechanisms


.. Process Design and Experimental Results

..

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C

CCCCC

A B C D E F

event drawn it is C

individual signals drawn conditional on event C

signals dispersed to separate individuals

C

C


50 Process Design and Experimental Results

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$90

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Committees and elections

Options and incentives

Alternatives: Points on the Chalkboard


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Committees and elections

Options and incentives

conflict and incentives


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Rules and Institutions

Equilibrium and cooperative game models (e.g the core) tend to be the best models of the outcome


  • INFORMATION VARIABLE: Process Design and Experimental Results

  • DECISIONS ARE MADE BY THOSE WHO CARE (COMMITTEE MEMBERS WHO VOTE) BUT DO NOT KNOW THE STATE

  • THE STATE IS KNOWN BY THOSE WHO CARE BUT CANNOT VOTE

  • INFORMED AGENTS HAVE A DYADIC, EQUILIBIRUM CONFORMING RELATIONSHIP.


4 Process Design and Experimental Results

3

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Linear Influence Hypothesis Process Design and Experimental Results

Dyadic

Equilibrium Conforming


  • RESULTS Process Design and Experimental Results

  • The institutional design was successful: Information Aggregation takes place

  • The general informational environment is important

  • We have some understanding of why

  • The linear Influence Hypothesis works well

  • The behaviors of the insiders have expected features

  • The initial recommendations of insiders is not the only source of information


The institutional design was successful: Information Aggregation takes place

The general informational environment is important


Polar Cases: Full Information About the State Aggregation takes place

Polar Cases: No Information About State


COMMITTEE NEVER LEARNS THE TRUTH Aggregation takes place

COMMITTEE LEARNS TRUTH AFTER EVERY DECISION



COMPETITION AND STRATEGIES OF INSIDERS: Shaped by the institutions

  • The insider proposals contain information and it is used. The linear inference model receives support.

  • Equilibrium conforming conflicts reduce the advantage of collusion among insiders.

  • Strategic exaggerations and misrepresentations by insiders can be observed.


SOURCES OF INFORMATION institutions

LINEAR INFLUENCE MODEL

Insider recommendations are potential sources of information

Feedback

.51,.51

No Feedback

.51, .48


Initial proposals A and B institutions

The distance between insider recommendations is increasing in periods for feedback, but the distance is not statistically significant for the periods with no feedback



Lack of trust in initial recommendations causes people to look for other sources of information such as amendments to proposals.


Accuracy improves with truthfulness of insiders and with experience
Accuracy improves with truthfulness of insiders and with experience

Decision distancei = distance between a&b recs + period + constant

  • Conclusions: distance from equilibrium increases with the distance between A & B’s recommendations grow, but the amendment process possesses conveys information which decreases error

feedback environment



SPEICAL COMMITTEE ORGANIZATION FACILITATES INFORMATION AGGREGATION: INFORMATION SEEPS IN EVEN WHEN HELD ONLY BY SELF INTERESTED PARTIES.

DYADIC, EQUILIBRIUM CONFORMING CONFLECTS ARE CENTRAL: CLASSICAL MODELS OF COMMITTEE DECISIONS APPLY

THE SUCCESS OF THE MECHANISM DEPENDS UPON THE BACKGROUND INFORMATION ENVIRONMENT


THE END AGGREGATION: INFORMATION SEEPS IN EVEN WHEN HELD ONLY BY SELF INTERESTED PARTIES.


ADDITIONAL OBSERVATIONS AGGREGATION: INFORMATION SEEPS IN EVEN WHEN HELD ONLY BY SELF INTERESTED PARTIES.



Total pivotal
Total Pivotal than the Previous Proposal


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