Common value elections with private information and informative priors: Theory and experiments

Abstract

We study efficiency and information aggregation in common value elections with contin-uous private signals and informative priors. We show that small elections are not generally efficient and that there are equilibria where some voters vote against their private signal even if it provides useful information and abstention is allowed. This is not the case in large elections, where the fraction of voters who vote against their private signal tends to zero. In an experiment, we then study how informativeness of priors and private signals impact efficiency and information aggregation in small elections. We find that there is a substantial amount of voting against the private signal. Moreover, while most experimental elections are efficient, we find that it is not generally the case that better private information leads to better decisions.