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Research and the Approval Process: The Organization of Persuasion

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  • Ottaviani, Marco

Abstract

An informer sequentially collects information at a cost to influence an evaluator's choice between rejection and approval. Payoffs and control rights are split between informer and evaluator depending on the organizational rules governing the approval process. We compare the performance of different organizations from a positive and normative perspective, depending on the commitment power of informer and evaluator. As a welfare benchmark we recover Wald's (1947) classic solution for a statistician with payoff equal to the sum of our informer and evaluator. We apply the analysis to the regulatory process for drug approval and to the market for new technologies.

Suggested Citation

  • Ottaviani, Marco, 2017. "Research and the Approval Process: The Organization of Persuasion," CEPR Discussion Papers 11939, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11939
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    More about this item

    Keywords

    Persuasion; Information; Organization; Opproval;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation

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