Wouter Dessein

Why a Group Needs a Leader: Decision-Making and Debate in Committees

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Abstract:
I develop a model of group decision-making, in which a committee generates proposals and holds open discussions, but the ultimate decision is either taken by a leader (decision by authority) or by majority vote. Optimal communication processes are studied that combine both cheap talk statements (proposals) and costly state verification (discussions). I show that by favouring one particular agent—the leader—authoritative decisionmaking reduces rent-seeking discussions and often results in a higher decision-quality relative to majority decision-making. Institutions which guarantee a "right to voice" by separating the roles of decision maker and discussion leader may further improve efficiency.

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