Incentives in Group Decision-Making with Uncertainty and Subjective Beliefs

Abstract

We address the problem of decision-making in group settings where there is uncertainty and disagreement about the utility that actions will yield. Each individual brings his own private information and subjective beliefs, and a decision-maker aims to arrive at a choice that sensibly aggregates all relevant information to maximize expected social welfare. Agents and the decision-maker revise beliefs based on those held by others; we adopt a weighted averaging model, where the weight one agent assigns to another can be thought of as the agent’s “trust ” in the other’s subjective beliefs. If revised beliefs may yield conflicting opinions about which action is optimal, there is a problem of incentives. We provide a payment mechanism that yields implementation of the decisionmaker’s desired choice in an ex post equilibrium for arbitrary trust levels. In other words, we solve the disensus problem that arises when agents (and perhaps the decisionmaker) disagree about how to weigh each others’ information in aggregating beliefs. 1