Voting with Endogenous Information Acquisition: Theory and Evidence

The standard model of jury or committee voting, with costless, exogenously given and noisy but informative signals regarding the true state of the world, predicts that the efficiency of group decision-making increases unambiguously with the group size. However, once signal acquisition is made a costly and endogenous decision, there are important free-riding considerations that counterbalance the information aggregation effect. If the cost of acquiring information is fixed, then rational voters have disincentives to purchase information as the group size becomes larger since the impact of their vote becomes smaller. In this paper we investigate the extent to which human subjects recognize this trade-off between information aggregation and free-riding in a laboratory experiment where we vary the group size, the cost of information acquisition and the precision of signals. We find that in most of the settings we study, free-riding incentives are weak as there is a pronounced tendency for subjects to over-acquire information relative to equilibrium predictions and we offer several possible explanations for this finding.

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