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To Invite or Not to Invite a Lobby, That Is the Question

Author

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  • Gregor Martin

    (Faculty of Social Sciences, Institute of Economic Studies, Charles University in Prague, IES FSV UK, Opletalova 26 11000, Prague CZ)

Abstract
We study a game in which a lobby with verifiable private evidence discloses her evidence to a policy-maker if and only if she agrees to a transfer that is proposed by the policy-maker. This setting is motivated by the literature of pay-and-lobby politics, which finds that politicians schedule informative meetings with lobbyists on the basis of their campaign contributions. We admit both positive transfers (fees) and negative transfers (compensations), which implies not only that the policy-maker can commit to not listen but also that the lobby can commit to not talk. In a binary action space, we solve the game for all timings, prior beliefs, information structures, and valuation parameters. We identify the settings in which the policy-maker strategically discourages the lobby’s participation by announcing an unacceptable transfer. Whether ‘burying one’s head in the sand’ increases or decreases welfare depends on the degree of the policy-maker’s benevolence.

Suggested Citation

  • Gregor Martin, 2015. "To Invite or Not to Invite a Lobby, That Is the Question," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 143-166, July.
    • Handle: RePEc:bpj:bejtec:v:15:y:2015:i:2:p:143-166:n:7
    DOI: 10.1515/bejte-2014-0022
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    Cited by:

    1. Martin Gregor, 2016. "Tullock's Puzzle in Pay-and-Play Lobbying," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 368-389, November.

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