Transparency and Policymaking with Endogenous Information Provision

TL;DR

This paper develops a model to analyze how politicians' reputation concerns influence endogenous information provision by biased lobbyists, showing that transparency can either promote or hinder information sharing depending on what is publicly known.

Contribution

It introduces a model linking reputation concerns, information provision, and transparency design, revealing how transparency impacts lobbyist behavior based on preference visibility.

Findings

Publicly known lobbyist preferences lead to more information provision.

Unknown preferences may cause less information sharing due to reputation concerns.

Transparency of decision consequences can sometimes impede information provision.

Abstract

How does the politician's reputation concern affect information provision when the information is endogenously provided by a biased lobbyist? I develop a model to study this problem and show that the answer depends on the transparency design. When the lobbyist's preference is publicly known, the politician's reputation concern induces the lobbyist to provide more information. When the lobbyist's preference is unknown, the politician's reputation concern may induce the lobbyist to provide less information. One implication of the result is that given transparent preferences, the transparency of decision consequences can impede information provision by moderating the politician's reputational incentive.