Abstract
This paper compares centralized and decentralized policymaking in a game theoretic model of informational lobbying and political contributions. In the model, an interest group first produces verifiable evidence about the welfare effects of its preferred policy and then engages in monetary lobbying. The analysis highlights a new channel through which centralized policymaking affects social welfare: centralization can incentivize the interest group to produce less informative evidence, leading to less informed policy decisions and lower social welfare. This channel is most relevant when the interest group is only willing to pay small political contributions to policymakers. When the interest group’s willingness to pay becomes larger, centralized policymaking affects social welfare by changing the degree of political capture.
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