Informational Lobbying and Pareto-Improving Agenda Constraint

Interest groups (IGs) lobby policymaker (PM) by offering verifiable, policy-relevant information. The PM is limited in (1) his ability to verify the information offered by the IGs (access constraint) and (2) the number of issues he can implement reform on (agenda constraint). We show that when there...

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Bibliographic Details
Published in:Journal of law, economics, & organization economics, & organization, 2019-11, Vol.35 (3), p.579-618
Main Authors: Dellis, Arnaud, Oak, Mandar
Format: Article
Language:English
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Summary:Interest groups (IGs) lobby policymaker (PM) by offering verifiable, policy-relevant information. The PM is limited in (1) his ability to verify the information offered by the IGs (access constraint) and (2) the number of issues he can implement reform on (agenda constraint). We show that when there exists an access constraint but no agenda constraint, the equilibrium exhibits “overlobbying,” that is, an IG with unfavorable information may lobby hoping that, the PM, unable to verify the information, may take the costly act of lobbying as a signal of favorable information and therefore implement reform on its issue. We then show that the presence of an agenda constraint can improve information transmission by curbing overlobbying. We identify circumstances under which an agenda constraint improves the ex ante expected welfare of both the PM and of each IG, thereby generating a Pareto improvement.
ISSN:8756-6222
1465-7341
DOI:10.1093/jleo/ewz002