Committees and special interests

Some committees convene behind closed doors while others publicly discuss issues and make their decisions. This paper studies the role of open and closed committee decision making in presence of external influence. We show that restricting the information of interest groups may reduce the bias towards special interest politics. Moreover, there are cases where benefits from increasing the number of decision makers can only be reaped if the committee's sessions are not public. In open committees benefits from voting insincerely accrue not only when a decision maker's vote is pivotal. As the number of voters increases, the cost of voting insincerely declines in an open committee because the probability of being pivotal declines. This is not the case in a closed committee where costs and benefits of insincere voting only arise when a voter is pivotal. JEL Classification: D71, D72, D73Committees, common agency, interest groups, voting

Preselection and expert advice

"The final authenticated version is available online at https://doi.org/10.1007/s00182-016-0551-9We study the effects of preselection on an expert’s advice about the execution of a project if its execution yields more precise estimates about the expert’s expertise. The in troduction of a preselection stage, in which the decision maker evaluates the project before asking for advice, alters the expert’s perception of the problem. We identify conditions under which preselection occurs in equilibrium. We show that if the expert adjusts his behavior, the option to preselect may reduce the expected utility of the decision maker.Collaborative Research Center 88

Essays on efficiency and private information

Verhandlungstheorie ; Informationseffizien

Transparency and special interests

In this paper opposing lobbies influence a politician via contributions. Society may grant access to decision relevant information. Transparency maximizes welfare if the lobbies have a similar size. Secrecy is optimal if their size is comparable, but not too similar.Bribes Corruption Common agency

Committees and special interests

Some committees convene behind closed doors while others publicly discuss issues and make their decisions. This paper studies the role of open and closed committee decision making in presence of external influence. We show that restricting the information of interest groups may reduce the bias towards special interest politics. Moreover, there are cases where benefits from increasing the number of decision makers can only be reaped if the committee's sessions are not public. In open committees benefits from voting insincerely accrue not only when a decision maker's vote is pivotal. As the number of voters increases, the cost of voting insincerely declines in an open committee because the probability of being pivotal declines. This is not the case in a closed committee where costs and benefits of insincere voting only arise when a voter is pivotal

Information Sellers in Financial Markets ∗

This paper analyzes the market for financial information and the incentive of institutions, such as Reuters, to provide information to traders in decentralized financial markets. We derive the following results. (i) The optimal selling strategy consists of selling identical information (Reuters’ screen) to all traders. (ii) The traders buy information from the same providers. If the traders may either buy information from the incumbents or an entrant and the incumbents charge not too high a price, then the entrant has no demand even though he sells for free information of the same quality. (iii) The social benefit of an information provision industry is non-monotonic in the acquisition cost. Depending on this cost, economy of scale may have both a positive and negative effect

Safety Nets Within Banks

We study how banks should protect their credit departments against the external influence from potential borrowers. We analyze four mechanisms that are widespread in practice: a credit board with unanimity or simple majority, a hierarchy and an advisory system. A bank faces a trade-off between the quality of information aggregation and the effectiveness of barriers against external influence. We provide a ranking of the different schemes. Some of them are equivalent even though the credit managers' decision power differs. In large credit decisions, banks should sacrifice on the quality of information aggregation in order to better protect the decision making process from outside influence.hierarchies; lobbying; voting rules