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Bureaucratic Provision: Influencing vs. Lying

  • Samarth Vaidya

In this paper a public bureau can extract surplus value from the services it provides not only by misrepresenting its production costs to its oversight committee but also by influencing the perceptions of the legislative body such as the parliament or the congress and the public at large by costly argumentation. By juxtaposing the bureau's ability to "influence" with its ability to misreport or "lie", I examine the impact influencing might have on the bureau's incentives to lie and on the efficiency of bureaucratic provision. I find that a truth-telling equilibrium could exist where the bureau's ability to influence would deter it from lying and the level of bureaucratic provision would be efficient. However, there could also be an equilibrium where the bureau would lie in which case there would be either over-production or under-production. This suggests that even when the bureau only cares about extracting the surplus value of its production, there could still be over-production simply due to the bureau's ability to distort cost information

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Paper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 251.

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Date of creation: 11 Aug 2004
Date of revision:
Handle: RePEc:ecm:ausm04:251
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  1. Niskanen, William A, 1975. "Bureaucrats and Politicians," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 617-43, December.
  2. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer, vol. 7(2), pages 283-290.
  3. Chan, Kenneth S. & Mestelman, Stuart, 1988. "Institutions, efficiency and the strategic behaviour of sponsors and bureaus," Journal of Public Economics, Elsevier, vol. 37(1), pages 91-102, October.
  4. Moene, Karl O., 1986. "Types of bureaucratic interaction," Journal of Public Economics, Elsevier, vol. 29(3), pages 333-345, April.
  5. Breton, Albert & Wintrobe, Ronald, 1975. "The Equilibrium Size of a Budget-maximizing Bureau: A Note on Niskanen's Theory of Bureaucracy," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 195-207, February.
  6. Hirshleifer, Jack & Osborne, Evan, 2001. " Truth, Effort, and the Legal Battle," Public Choice, Springer, vol. 108(1-2), pages 169-95, July.
  7. Carroll, Kathleen A, 1989. "Industrial Structure and Monopoly Power in the Federal Bureaucracy: An Empirical Analysis," Economic Inquiry, Western Economic Association International, vol. 27(4), pages 683-703, October.
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