Biased contests |
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Authors: | Matthias Dahm Nicolás Porteiro |
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Institution: | 1. Departamento de Economía, Universitat Rovira i Virgili, Avenida de la Universitat, 1, 43204, Reus (Tarragona), Spain 2. Departament of Economics, Universidad Pablo de Olavide, Carretera Utrera km 1, Sevilla, 41013, Spain
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Abstract: | We examine the effects of providing more accurate information to a political decision-maker lobbied by competing interests. We investigate how this bias in the direction of the correct decision affects efficiency, measured (inversely) by both the probability of taking an incorrect decision, and the amount of social waste associated to lobbying activities. We present a benchmark model in which increasing the bias always improves efficiency. However, this result is fragile as slight changes in the contest success function lead to slightly different models in which under either criterion there is no guarantee that more accurate information improves the decision. |
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