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A Theory of Influence: The Strategic Value of Public Ignorance

  • Isabelle Brocas
  • Juan D. Carillo

We analyze an agency model where one individual decides how much evidence he collects. We assume that he has free access to information, but all the news acquired become automatically public. Conditional on the information disclosed, a second individual with conflicting preferences undertakes an action that a ects the payo of both agents. In this game of incomplete but symmetric information, we show that the first individual obtains rents due to his superior ability to decide whether to collect or forego evidence, i.e., due to his control in the generation of (public) information. We provide an analytical characterization of these rents, that we label “rents of public ignorance”. They can be interpreted as, for example, the degree of influence that a chairman can exert on a committee due exclusively to his capacity to decide whether to keep discussions alive or terminate them and call a vote. Last, we show that similar insights are obtained if the agent decides first how much private information he collects and then how much of this information he transmits to the other agent.

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Paper provided by Institute of Economic Policy Research (IEPR) in its series IEPR Working Papers with number 05.9.

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Length: 27 pages
Date of creation: Jan 2005
Date of revision:
Handle: RePEc:scp:wpaper:05-9
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Web page: http://www.usc.edu/dept/LAS/economics/IEPR/

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  11. Kofman, Fred & Lawarree, Jacques, 1996. "On the optimality of allowing collusion," Journal of Public Economics, Elsevier, vol. 61(3), pages 383-407, September.
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  13. Wei Li, 2004. "Mind Changes in the Design of Reporting Protocols," Theory workshop papers 658612000000000085, UCLA Department of Economics.
  14. Anthony M. Marino & John G. Matsusaka, 2005. "Decision Processes, Agency Problems, and Information: An Economic Analysis of Capital Budgeting Procedures," Review of Financial Studies, Society for Financial Studies, vol. 18(1), pages 301-325.
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