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Biased Contests

Author

Listed:
  • Matthias Dahm

    (Universidad Carlos III de Madrid)

  • Nicolás Porteiro

    (Department of Economics, Universidad Pablo de Olavide)

Abstract
We examine the effects of providing more accurate information to a political decision-maker who is lobbied by competing interests. Conventional wisdom holds that such a bias in the direction of the correct decision improves the efficiency of government. We provide a formal definition of bias which is derived from the same fundamentals that give rise to a contest model of lobbying. Efficiency of government is measured by both the probability of taking the correct decision and the amount of social waste associated to lobbying activities. We present a benchmark model in which increasing the bias always improves the efficiency of government under both criteria. However, this result is fragile in the sense that reasonable alternative assumptions in the micro-foundations lead to slightly different models in which -due to different strategic effects of bias- under either criterion there is no guarantee that more accurate information improves government.

Suggested Citation

  • Matthias Dahm & Nicolás Porteiro, 2006. "Biased Contests," Working Papers 06.21, Universidad Pablo de Olavide, Department of Economics.
    • Handle: RePEc:pab:wpaper:06.21
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Dahm, Matthias & Esteve-González, Patricia, 2018. "Affirmative action through extra prizes," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 123-142.
    2. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    3. Matthias Dahm & Nicolas Porteiro, 2005. "A Micro- Foundation for Non-Deterministic Contests of the Logit Form," Discussion Papers 1410, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Esteve-González, Patricia, 2016. "Moral hazard in repeated procurement of services," International Journal of Industrial Organization, Elsevier, vol. 48(C), pages 244-269.
    5. repec:cte:werepe:we070401 is not listed on IDEAS
    6. Osório, António (António Miguel), 2018. "Conflict and Competition over Multi-Issues," Working Papers 2072/306550, Universitat Rovira i Virgili, Department of Economics.

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    More about this item

    Keywords

    Endogenous Contests; Contest Success Function; Information provision;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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