Overlobbying and Pareto-improving Agenda Constraint

We develop a model of informational lobbying in which a policymaker must decide which issues to reform, but is uninformed about which issues he would be better off reforming. On each issue there is an informed interest group that always favors the adoption of reform, and which can lobby the policymaker by offering to provide verifiable information about the state of the world for its issue. A key feature of our model is that the policymaker faces time/resource constraints which may restrict both 1) his ability to grant access to and verify the information of all lobbying interest groups and 2) his ability to reform all issues. We show that when the policymaker can reform all issues, the act of lobbying by an interest group signals information only imperfectly. In particular, an interest group may want to lobby the policymaker even when it does not possess favorable information in the hope that the policymaker is unable to verify its information but still takes the act of lobbying as a signal that the state is favorable to reform. We call such lobbying behavior 'overlobbying'. We then show that a restriction on the number of issues on which reforms can be implemented, viz. an agenda constraint, can improve information transmission by eliminating overlobbying. Importantly, we identify circumstances in which an agenda constraint improves the ex ante welfare of the policymaker and of each interest group, leading to a Pareto improvement.