A Model of Public Consultation: Why is Binary Communication So Common?

This paper studies information transmission between multiple agents with heterogeneous preferences and a welfare maximizing 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. Short Title: PUBLIC CONSULTATION In many social environments, policy decisions are made following consultation with interested parties. For example, a local authority may try to find the optimal public services policy for the community by discussing with the residents, or a teacher may ask her students how fast they would like her lectures to be. Non-binding referendums can also be thought of as a communication device between the government and citizens. Suppose that a benevolent decision maker chooses the quality or quantity of a public good that is consumed by members of a group with heterogeneous preferences, but no monetary transfers are allowed. In order to inform her decision, the decision maker may communicate with the members. Are they willing to reveal their private information truthfully? How does the number of members affect the nature of communication? Why is it very often the School of Economics, University of Edinburgh, EH8 9JT, UK [email protected] I thank Vincent Crawford, Wouter Dessein, Mathias Dewatripont, Navin Kartik, David Myatt, Marco Ottaviani, Andrea Patacconi, John Quah, Jose V. Rodŕıguez Mora, József Sákovics, Joel Sobel, Koichi Tadenuma, an anonymous referee, and seminar participants at Aberdeen, Edinburgh, Oxford, and Southampton for helpful discussions and comments. I am particularly grateful to James Malcomson and Margaret Meyer for their guidance. All errors are my own.