DP4313 Lobbying, Information Transmission and Unequal Representation
|Author(s):||Lars Frisell, Johan N. M. Lagerlöf|
|Publication Date:||March 2004|
|Keyword(s):||bias, inequality, information transmission, interest groups, lobbying, representation, reputation|
|JEL(s):||D72, D78, D82|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=4313|
We study the effects of unequal representation in the interest-group system on the degree of information transmission between a lobbyist and a policy-maker. Employing a dynamic cheap-talk model in which the lobbyist cares instrumentally about his reputation for truth telling, we show that the larger the inequality, the less information can credibly be transmitted to the policy-maker. We also investigate the effects of inequality on welfare, and discuss the welfare effects of institutions that increase transparency but which, as an unintended side effect, lower the lobbyist?s incentives for truth telling.