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Ideological Uncertainty and Lobbying Competition

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  • Martimort, David
  • Semenov, Aggey

Abstract

Polarized interest groups (principals) compete to influence a decision-maker (agent) through monetary contributions. This decision-maker chooses a one-dimensional policy and has private information about his ideal point. Competition between interest groups under asymmetric information yields a rich pattern of equilibrium strategies and payoffs. Policies are systematically biased towards the decision-maker's ideal point and it may sometimes lead to a "laissez-faire" equilibrium. Either the most extreme decision-makers or the most moderate ones may get information rent depending on the importance of their ideological bias. The market for influence may exhibit segmentation with interest groups keeping an unchallenged influence on ideologically close-by decision-makers. Indeed, interest groups stop contributing when there is too much uncertainty on the decision-maker's ideology and when the latter is ideologically too far away.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6992.

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Date of creation: 02 Feb 2008
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Handle: RePEc:pra:mprapa:6992

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Keywords: Lobbying Competition; Common Agency; Asymmetric Information; Contributions;

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References

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Cited by:
  1. Guilherme Carmona & José Fajardo, 2006. "Existence of Equilibrium in Common Agency Games with Adverse Selection," IBMEC RJ Economics Discussion Papers 2006-05, Economics Research Group, IBMEC Business School - Rio de Janeiro.
  2. Semenov, Aggey, 2010. "Common agency with risk-averse agent," Journal of Mathematical Economics, Elsevier, vol. 46(1), pages 38-49, January.
  3. Mike Felgenhauer, 2007. "Policy Bias Equivalence under Common Agency," Journal of Economics, Springer, vol. 90(3), pages 295-312, April.
  4. Felgenhauer, Mike, 2010. "Transparency and special interests," Economics Letters, Elsevier, vol. 106(1), pages 4-7, January.
  5. Martimort, David & Stole, Lars, 2011. "Public Contracting in Delegated Agency Games," MPRA Paper 32874, University Library of Munich, Germany.
  6. Eddie Dekel & Matthew O. Jackson & Asher Wolinksy, 2006. "Vote Buying II: Legislatures and Lobbying," Discussion Papers 1433, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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