Abstract
Decisions-makers often rely on information supplied by interested parties. In practice, some parties have easier access to information than other parties. In this light, we examine whether more powerful parties have a disproportionate influence on decisions. We show that more powerful parties influence decisions with higher probability when their stakes are sufficiently large. However, in expected terms, decisions do not depend on the relative strength of interested parties. When parties have not provided information, decisions are biased towards the less powerful parties. Finally, we show that compelling parties to supply information destroys incentives to collect information.
Highlights
IntroductionThe implication is that there is a relatively advantaged party and a relatively disadvantaged party
In June 2018, the Dutch government and energy companies Shell and ExxonMobil reached an agreement to gradually reduce and eventually stop gas extraction in the Northern Netherlands
One of the main questions we address is whether more powerful interest groups have a bigger say in decisions, whereas the model by Austen-Smith and Wright is very suitable for understanding groups decisions on whether to lobby or not
Summary
The implication is that there is a relatively advantaged party and a relatively disadvantaged party In this way, we are able to address the concern regarding the influence of powerful interest groups on decisions. We are able to address the concern regarding the influence of powerful interest groups on decisions Another important feature of our model is that given the available information, the decision maker aims at making the socially optimal decision. In expected terms, the final decision does not depend on the relative strength of the parties This neutrality result sheds light on the role of powerful interest groups in politics. Our model predicts that if powerful interest groups do not provide information, decisions are made against their interests In expected terms, these effects cancel out because of the Martingale property. If the decision maker is biased or can be bribed our result that in expected terms the relative power of parties is irrelevant does not hold any more
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