Research

Majority voting is considered an efficient information aggregation mechanism in committee decision-making. We examine if this holds in environments where voters first need to acquire information from sources of varied quality and cost. In such environments, efficiency may depend on free-riding incentives and the 'transparency' regime - the knowledge voters have about other voters' acquired information. Intuitively, more transparent regimes should improve efficiency. Our theoretical model instead demonstrates that under some conditions, less transparent regimes can match the rate of efficient information aggregation in more transparent regimes if all members cast a vote based on the information they hold. However, a Pareto inferior swing voter's curse (SVC) equilibrium arises in less transparent regimes if less informed members abstain. We test this proposition in a lab experiment, randomly assigning participants to different transparency regimes. Results in less transparent regimes are consistent with the SVC equilibrium, leading to less favourable outcomes than in more transparent regimes. We thus offer the first experimental evidence on the effects of different transparency regimes on information acquisition, voting, and overall efficiency.

Threshold uncertainty has been previously shown to impede the efficient provision of threshold public goods. Do groups perform better when their members can acquire information on the location of the threshold? We conduct an online experiment on threshold public good provision where participants can simultaneously choose to buy private clues about the location of the threshold. Each group contains two low-risk and two high-risk members who differ in their expected loss from failing to reach the threshold. We find that groups reach the threshold less frequently when group members can acquire information than when no information acquisition is possible. We attribute this to optimism: individuals acquire too little information to adequately update their priors about the true threshold value, resulting in too low contributions. Low-risk members are disproportionately responsible for the failure of collective action. Our findings suggest that giving individuals a possibility to learn via private information acquisition is insufficient in solving the problem of threshold uncertainty.

The ability to browse information through social media platforms like Facebook and X is naturally impacting people’s news consumption habits with flow-on impact on traditional news media companies who are putting up subscription-based paywalls to remain viable. We analyse this issue by examining a potential reader’s decision to pay to consume traditional media news in the presence of free information available on social media. We find that a reader’s prior (or bias), the access-cost of traditional media, as well as the relative inaccuracy of information on social media compared to traditional media news, all impact their decision to use traditional media. Surprisingly, when social media accuracy and cost of accessing traditional media are relatively low, social media can increase the demand of traditional media by enhancing the value of its information to some readers. This effect can persist even if social media becomes incrementally more accurate via fact-checking. There are also circumstances when the presence of social media can boost the subscription revenue of traditional media. However, when social media and traditional media information have similar or high accuracy, the former mostly acts as a substitute and lowers the subscription revenue of traditional media.