Information Design in Object Allocation Problems

Information Design in Object Allocation Problems

With Lenka Fiala and Sulagna Dasgupta.

Abstract: We investigate how people trade off individual and group interests in a setting of strategic interaction with imperfect information about private benefits of a specific action. In a large-scale online experiment with 2600 subjects, we compare three information provision settings and their impact on people’s choices and resulting social welfare. Contrary to theoretical predictions, we find that a partial-information policy designed to maximize group welfare does not improve upon a full information benchmark even when individual and group objectives are aligned. In a setting where individual and group interests clash, in accordance with theoretical predictions, additional information provided by the same partial-information policy is ignored by the subjects. Our results are robust to accounting for different types of risk- and social- preferences, and various types of subject errors.

[manuscript in preparation]