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Are we Better Off if our Politicians Have More Information?

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  • Lagerlof, Johan

Abstract

This Paper studies a model of public policy with heterogeneous citizens/voters and two public goods: one (roads) is chosen directly by an elected policy-maker, and the other (pollution) depends stochastically on the amount of roads. Both a one-country and a two-country version of the model are analysed, the latter displaying externalities across the countries, which creates incentives for free-riding and strategic delegation. The welfare effects of providing the policy-maker with information about the relationship between roads and pollution are investigated, and it is shown that more information hurts some ? sometimes even all ? citizens. In particular, the opportunity not to build an institution for information gathering can serve as a commitment device for a country, although with the unfortunate effect of making the overall outcome even worse. Implications for the welfare effects of ?informational lobbying? are discussed.

Suggested Citation

  • Lagerlof, Johan, 2003. "Are we Better Off if our Politicians Have More Information?," CEPR Discussion Papers 3884, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3884
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    References listed on IDEAS

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    Cited by:

    1. Catherine C. Eckel & Ragan Petrie, 2011. "Face Value," American Economic Review, American Economic Association, vol. 101(4), pages 1497-1513, June.

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    More about this item

    Keywords

    Public information acquisition; Value of information; Welfare; Interest groups; Informational lobbying; Strategic delegation;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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