Implementing the “Wisdom of the Crowd”

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Abstract

We study a novel mechanism design model in which agents each arrive sequentially and choose one action from a set of actions with unknown rewards. The information revealed by the principal affects the incentives of the agents to explore and generate new information. We characterize the optimal disclosure policy of a planner whose goal is to maximize social welfare. One interpretation of our result is the implementation of what is known as the “wisdom of the crowd.” This topic has become increasingly relevant with the rapid spread of the Internet over the past decade.

Item Type: Journal Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH): Internet -- Economic aspects , Collective behavior -- Mathematical models
Journal or Publication Title: Journal of Political Economy
Publisher: University of Chicago Press
ISSN: 0022-3808
Official Date: October 2014
Dates:
Date
Event
October 2014
Published
28 October 2014
Accepted
Volume: 122
Number: 5
Page Range: pp. 988-1012
DOI: 10.1086/676597
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Restricted or Subscription Access
Date of first compliant deposit: 28 October 2016
Date of first compliant Open Access: 28 October 2016
Funder: Google Inter-university Center for Electronic Markets , Israeli Centers of Research Excellence (I-CORE), Israel Science Foundation (ISF)
Grant number: Center no. 4/11 (I-CORE), 032-1852 (ISF)
URI: https://wrap.warwick.ac.uk/83266/

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