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Title: Political biases in lobbying under asymmetric information
Authors: Martimort, D.
Semenov, A. 
Issue Date: Apr-2007
Citation: Martimort, D., Semenov, A. (2007-04). Political biases in lobbying under asymmetric information. Journal of the European Economic Association 5 (2-3) : 614-623. ScholarBank@NUS Repository.
Abstract: This paper introduces asymmetric information in a pluralistic model of interest groups competition and analyzes its impact on policy biases. Lobbying groups are uninformed on a decision maker's preferences and use nonlinear contributions not only to compete for the agent's services but also to learn about his preferences in an otherwise standard common agency model of lobbying. Asymmetric information can be either on the decision maker's ideal point (horizontal differentiation) or on the strength of his own preferences for ideology (vertical differentiation). At equilibrium, asymmetric information redistributes bargaining powers between interest groups and the decision maker in non-trivial ways that may depend on the kind of informational asymmetry which is postulated. Asymmetric information tends to mitigate the influence of interest groups and contributions might be significantly reduced. Interest groups no longer contribute for a change in policy what it is worth to them as under complete information. Contributions incorporate a discount related to the group's ability to solve the asymmetric information problem. © 2007 by the European Economic Association.
Source Title: Journal of the European Economic Association
ISSN: 15424766
DOI: 10.1162/jeea.2007.5.2-3.614
Appears in Collections:Staff Publications

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