This article studies information transmission between multiple agents with heterogeneous preferences and a welfare maximising decision maker who chooses the quality or quantity of a public good (e.g. size of a public project; pace of lectures in a classroom; government regulation) that is consumed by all of them. As the number of agents becomes larger, the quality of information transmission diminishes. The use of binary messages (e.g. 'yes or no') is shown to be a robust mode of communication even when the preferences and policy space are non-binary.
ASJC Scopus subject areas
- Economics and Econometrics