DP6168 Why a Group Needs a Leader: Decision-making and Debate in Committees.

Author(s): Wouter Dessein

Publication Date: March 2007

Keyword(s): Authority , Committees , Debate , Group decision-making , Leadership , Majority rule

JEL(s): D71 , D72 , D82 , D83

Programme Areas: Industrial Organization

Link to this Page: www.cepr.org/pubs/dps/DP6168.asp.asp

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 decision-making 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.