Working Paper: CEPR ID: DP16100
Authors: Dino Gerardi; Ignacio Monzon; Edoardo Grillo
Abstract: In democratic societies, politicians craft reform proposals which are then subject to the scrutiny of external authorities. Politicians want their proposals approved and can work to improve their quality. Authorities have their own agendas: they may be in favor or against the reforms under their scrutiny. We study how the authority’s agenda affects the likelihood that a reform is approved and its quality. We show that an authority in favor of a reform can be detrimental towards its approval. This happens when it is easy to incentivize the politician’s work andthe status quo alternative is not too attractive.
Keywords: Information Transmission; Moral Hazard; Oversight; Persuasion
JEL Codes: D72; D73; D82; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Authority Type (M54) | Politician's Effort (D72) |
| Politician's Effort (D72) | Reform Quality (L15) |
| Reform Quality (L15) | Approval Probability (D81) |
| Authority Type (M54) | Approval Probability (D81) |