Producing and Manipulating Information

22 Pages Posted: 18 Apr 2003

See all articles by Robert Dur

Robert Dur

Erasmus University Rotterdam (EUR) - Department of Economics; Tinbergen Institute; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Otto H. Swank

Erasmus University Rotterdam - Department of Economics; Tinbergen Institute Rotterdam (TIR)

Date Written: April 2003

Abstract

To reduce the chances of policy failures, policy makers need information about the effects of policies. Sometimes, policy makers can rely on agents who already possess the information. Often, the information has yet to be produced. This raises two problems. First, for a policy maker it is hard to ascertain how much effort an expert has put in acquiring information. Second, when the expert has an interest in the policy outcome, he/she may manipulate information to bring the policy decision more in line with his/her preferences. We show that experts who are unbiased toward the policy alternatives put highest effort in collecting information. Eliminating manipulation of information, however, requires that the preferences of the policy maker and the expert are aligned. Hence, when selecting an expert, policy makers face a trade-off. We show that policy makers optimally appoint experts with policy preferences which are less extreme than their own.

JEL Classification: D78, D82, D83

Suggested Citation

Dur, Robert and Swank, Otto H., Producing and Manipulating Information (April 2003). Available at SSRN: https://ssrn.com/abstract=396320

Robert Dur (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

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Tinbergen Institute

Amsterdam/Rotterdam
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Otto H. Swank

Erasmus University Rotterdam - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute Rotterdam (TIR)

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 4081448 (Phone)
+31 10 2120551 (Fax)

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