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Learning from Interested Parties

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Abstract:

Decision-makers often rely on external sources for their information such as consultants, real estate agents, or ``helpful sales agents. In politics, decision makers often rely in information from interest groups. This paper analyzes how much the decision-maker can learn from such interested parties---informants who themselves have a stake in the decision to be made.

I show that the information provider has an incentive and the ability to withhold some information if he is not known to be fully informed. Since the decision-maker learns about some states of the world but never about others, learning from interested information providers is asymmetric. Applying the results to the problem of delegation, I show that it a legislature can elicit more information from interest groups when it delegates the decision to a bureaucrat while constraining the bureaucrat's discretion. The paper thus extends the theory of delegation by endogenizing bureaucratic expertise, recognizing that the latter is, at least in part, the result of voluntary information revelation by interest groups.

Most Common Document Word Stems:

inform (134), e (93), group (76), bureaucrat (76), x (75), 1 (74), interest (62), p (59), g (58), r (56), xb (48), m (46), b (45), polici (41), 2 (40), xg (39), messag (39), q (37), deleg (36), f (33), learn (33),

Author's Keywords:

Delegation, Informational Lobbying, Asymmetric Information, Sender-Receiver game
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Association:
Name: American Political Science Association
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http://www.apsanet.org


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URL: http://www.allacademic.com/meta/p40014_index.html
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MLA Citation:

Feldmann, Sven. "Learning from Interested Parties" Paper presented at the annual meeting of the American Political Science Association, Marriott Wardman Park, Omni Shoreham, Washington Hilton, Washington, DC, Sep 01, 2005 <Not Available>. 2011-03-14 <http://www.allacademic.com/meta/p40014_index.html>

APA Citation:

Feldmann, S. , 2005-09-01 "Learning from Interested Parties" Paper presented at the annual meeting of the American Political Science Association, Marriott Wardman Park, Omni Shoreham, Washington Hilton, Washington, DC Online <APPLICATION/PDF>. 2011-03-14 from http://www.allacademic.com/meta/p40014_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Decision-makers often rely on external sources for their information such as consultants, real estate agents, or ``helpful sales agents. In politics, decision makers often rely in information from interest groups. This paper analyzes how much the decision-maker can learn from such interested parties---informants who themselves have a stake in the decision to be made.

I show that the information provider has an incentive and the ability to withhold some information if he is not known to be fully informed. Since the decision-maker learns about some states of the world but never about others, learning from interested information providers is asymmetric. Applying the results to the problem of delegation, I show that it a legislature can elicit more information from interest groups when it delegates the decision to a bureaucrat while constraining the bureaucrat's discretion. The paper thus extends the theory of delegation by endogenizing bureaucratic expertise, recognizing that the latter is, at least in part, the result of voluntary information revelation by interest groups.

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Associated Document Available American Political Science Association
Associated Document Available Political Research Online

Document Type: application/pdf
Page count: 22
Word count: 7067
Text sample:
Learning from Interested Parties Sven E. Feldmann∗ Northwestern University Kellogg School of Management August 29 2005 Incomplete draft Abstract Decision-makers often rely on external sources for their information such as consultants real estate agents or “helpful sales agents. In politics decision makers often rely in information from interest groups. This paper ana- lyzes how much the decision-maker can learn from such interested parties— informants who themselves have a stake in the decision to be made. I show that the
“Advocates ” Journal of Political Economy 107(1) 1–39. [6] Epstein D. and O’Halloran S. (1999) Delegating Powers: A Transaction Cost Politics Approach to Policy Making Under Separate Powers (Cambridge: Cambridge University Press). [7] Laffont Jean-Jacques and Jean Tirole (1991) “The Politics of Government Decision- Making: A Theory of Regulatory Capture” Quarterly Journal of Economics 106(4):1089–127. [8] Milgrom Paul (1981) “Good News and Bad News: Representation Theorems and Applications” Bell Journal of Economics 12(2):380–91. [9] Milgrom P. and Roberts J.


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