Clueless Politicians: On Policymaker Incentives for Information Acquisition in a Model of Lobbying

Abstract

We develop a model of policymaking in which a politician decides how much expertise to acquire or how informed to become about issues before interest groups (IGs) engage in monetary lobbying. For a range of issues, the policymaker (PM) prefers to remain less informed about policy than may be socially optimal, even when acquiring expertise or better information is costless. Such a strategy leads to more-intense lobbying competition and larger political contributions. We identify a novel benefit of campaign finance reform, showing how contribution limits decrease the incentives that PMs have to remain under-informed on the issues on which they vote. The analysis goes on to allow for a fully general information strategy in the spirit of Bayesian Persuasion. In the case of symmetric IGs, a PM’s optimal strategy maximizes the probability he is “on the fence” when deciding between policies.