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Learning and Signalling by Advisor Selection

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  • Letterie, Wilko
  • Swank, Otto H

Abstract

In this paper the authors consider a model where a policy maker uses advice in order to (1) obtain information about the consequences of an innovation (information motive) and (2) to support political legitimacy of her decision (persuasion motive). The authors conduct their analysis in the context of a cheap-talk game with three players; (1) a policy maker, (2) the median voter in parliament or of the electorate and (3) an advisor. The advisor has private information about the consequences of policy. Communication between an advisor and a recipient improves as their preferences are closer aligned. If the preferences of the policy maker and the median voter are different the policy maker faces a trade-off. On the one hand, she wants to gain information to judge whether the innovation is worthwhile. On the other hand, she needs to convince the median voter whether the information is desirable. Copyright 1997 by Kluwer Academic Publishers

Suggested Citation

  • Letterie, Wilko & Swank, Otto H, 1997. "Learning and Signalling by Advisor Selection," Public Choice, Springer, vol. 92(3-4), pages 353-367, September.
  • Handle: RePEc:kap:pubcho:v:92:y:1997:i:3-4:p:353-67
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    References listed on IDEAS

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    1. Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004. "Opportunistic Political Cycles: Test in a Young Democracy Setting," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1301-1338.
    2. Rodrigo Cerda & Rodrigo Vergara, 2007. "Business cycle and political election outcomes: Evidence from the Chilean democracy," Public Choice, Springer, vol. 132(1), pages 125-136, July.
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    4. Torsten Persson & Guido Tabellini, 2003. "Do Electoral Cycles Differ Across Political Systems?," Working Papers 232, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    5. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    6. Brender, Adi & Drazen, Allan, 2003. "Where Does the Political Budget Cycle Really Come From?," CEPR Discussion Papers 4049, C.E.P.R. Discussion Papers.
    7. William D. Nordhaus, 1975. "The Political Business Cycle," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 169-190.
    8. Berger, Helge & Woitek, Ulrich, 1997. "Searching for Political Business Cycles in Germany," Public Choice, Springer, vol. 91(2), pages 179-197, April.
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    Cited by:

    1. Swank, Otto H., 2000. "Policy advice, secrecy, and reputational concerns," European Journal of Political Economy, Elsevier, vol. 16(2), pages 257-271, June.
    2. Swank Otto H., 2000. "Seeking information: the role of information providers in the policy decision process," Public Economics 0004004, EconWPA.
    3. Sangwon Park, 2013. "Separation of Two Agencies for Fiscal Policies," Korean Economic Review, Korean Economic Association, vol. 29, pages 351-377.
    4. Feld, Lars P. & Kirchgassner, Gebhard, 2000. "Direct democracy, political culture, and the outcome of economic policy: a report on the Swiss experience," European Journal of Political Economy, Elsevier, vol. 16(2), pages 287-306, June.
    5. Otto H. Swank & Phongthorn Wrasai, 2002. "Deliberation, Information Aggregation and Collective Decision Making," Tinbergen Institute Discussion Papers 02-006/1, Tinbergen Institute, revised 03 Dec 2002.

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