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Title: Information Aggregation and Group Decisions

Authors: Joel Sobel

Abstract:

Individuals with identical preferences receive a signal about the unknown state of the world and decide upon a utility-maximizing recommendation on the basis of that signal. The group's decision maximizes the common utility function based on perfect pooling of individual information. With no restrictions on the information structure, the individually optimal decisions place no constraints on the group's decision. In a monotone environment in which individuals receive conditionally independent signals, the paper presents conditions under which polarization does and does not arise.