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Lobbying, Information Transmission, and Unequal Representation

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Author Info

  • Johan Lagerlof

    (WZB & CEPR)

  • Lars Frisell

    (Sveriges Riksbank)

Abstract

We study the effects of unequal representation in the interest-group system on the degree of information transmission between a lobbyist and a policymaker. Employing a dynamic cheap-talk model in which the lobbyist cares instrumentally about his reputation for truthtelling, we show that the larger is the inequality, the less information can credibly be transmitted to the policymaker. We also investigate the effects of inequality on welfare and discuss the welfare effects of institutions that increase transparency but which as well, as an unintended side-effect, lower the lobbyist's incentives for truthtelling.

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File URL: http://128.118.178.162/eps/mic/papers/0402/0402013.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Microeconomics with number 0402013.

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Length: 26 pages
Date of creation: 09 Feb 2004
Date of revision:
Handle: RePEc:wpa:wuwpmi:0402013

Note: Type of Document - pdf; pages: 26; figures: included. The most updated version of the paper can be downloaded at www.JohanLagerlof.org.
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Web page: http://128.118.178.162

Related research

Keywords: lobbying; interest groups; reputation; information transmission; representation; inequality; bias;

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  1. Benabou, R. & Laroque, G., 1989. "Using Privileged Information To Manipulate Markets: Insiders, Gurus, And Credibility," Working papers 513, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
  3. Stephen Morris, 1999. "Political Correctness," Cowles Foundation Discussion Papers 1242, Cowles Foundation for Research in Economics, Yale University.
  4. Lagerlof, Johan, 1997. "Lobbying, information, and private and social welfare," European Journal of Political Economy, Elsevier, vol. 13(3), pages 615-637, September.
  5. Paul Milgrom & John Roberts, 1998. "Limit Pricing and Entry Under Incomplete Information: An Equilibrium Analysis," Levine's Working Paper Archive 245, David K. Levine.
  6. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
  7. Morten Bennedsen & Sven E. Feldmann, 2000. "Lobbying Legislatures," CIE Discussion Papers 2000-04, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  8. Vijay Krishna & John Morgan, 1999. "A Model of Expertise," Working Papers 154, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
  9. Potters, J.J.M. & Winden, F. van, 1992. "Lobbying and asymmetric information," Open Access publications from Tilburg University urn:nbn:nl:ui:12-223989, Tilburg University.
  10. Sobel, Joel, 1985. "A Theory of Credibility," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 557-73, October.
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