Informal Elections with Dispersed Information

Résumé

We study a model of information transmission through an informal election. Each one of partially informed senders can send a binary message to the receiver, and the receiver chooses a policy. The receiver is not committed to a policy rule that maps the distribution of messages to policy outcomes. This reflects situations such as nonbinding voting of shareholders on a management proposal, polls, protests, and petitions. Under complete information, the preferences of the receiver and the senders are aligned but when there is uncertainty about the state, there is a conflict of interest: the receiver is more concerned than the senders about choosing the wrong policy in one of the states. Existing work shows that for many such situations, the bias prohibits the transmission of any information. We consider a setting in which sending one of the messages can have a direct cost or benefit. For example, there are positive costs or benefits of voting or participation but no costs of abstention. We characterize the maximal amount of information transmission when the population is large, and show that it depends on the reverse hazard rate of the cost distribution at 0. The interplay between the benefits and costs leads to a new strategic complementarity effect in the senders’ propensity to act based on their information. Senders join their voices to overcome the noise. When the reverse hazard rate is infinity (for example when there are no benefits from participation) information aggregates and the outcome is efficient. With Mehmet Ekmekci