Collective decisions with interdependent valuations

Many collective decision problems have in common that individuals' desired outcomes are correlated but not identical. This paper studies collective decisions with private information about desired policies. Each agent holds private information which mainly concerns his own bliss point, but private information also affects all other agents. We concentrate on two specific mechanisms, the median and mean mechanism, establish the existence of symmetric Bayesian Nash equilibria of the corresponding games and compare the performance of the mechanisms for different degrees of interdependencies. Applications of our framework include the provision of public goods and the design of decision processes in international organizations. (C) 2003 Elsevier B.V. All rights reserved.