Lobbying and asymmetric information

  • Potters J
  • van Winden F
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Abstract

Informational lobbying-the use by interest groups of their (alleged)
expertise or private information on matters of importance for policymakers
in an attempt to persuade them to implement particular policies-is
often regarded as an important means of influence. This paper analyzes
this phenomenon in a game setting. On the one hand, the interest
group is assumed to have private information which is relevant to
the policymaker, whilst, on the other hand, the policymaker is assumed
to be fully aware of the strategic incentives of the interest group
to (mis)report or conceal its private information. It is shown that
in a setting of partially conflicting interests a rationale for informational
lobbying can only exist if messages bear a cost to the interest group
and if the group's preferences carry information in the 'right direction'.
Furthermore, it is shown that it is not the content of the message
as such, but rather the characteristics of the interest group that
induces potential changes in the policymaker's behavior. In addition,
the model reveals some interesting results on the relation between,
on the one hand, the occurrence and impact of lobbying and, on the
other hand, the cost of lobbying, the stake which an interest group
has in persuading the policymaker, the similarity between the policymaker's
and the group's preferences, and the initial beliefs of the policymaker.
Moreover, we relate the results to some empirical findings on lobbying.

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Authors

  • Jan Potters

  • Frans van Winden

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