Advocacy and Dynamic Influence
An advocate for a special interest provides advice to an uninformed planner for her to consider in making a sequence of important decisions. Although the advocate may have valuable information for the planner, it is is also known that the advocate is biased and will distort his advice in order to influence the planner's decision. Each time she repeats the problem, however, the planner learns about the accuracy of the advocate's recommendation, mitigating some of the advocate's incentive to act in a self-serving manner. We propose a theory of dynamic influence to explain why planners do sometimes rely on information provided by advocates in making decisions. We establish that the capability to commit to actions is a necessary condition for influential communication in this setting and characterize the optimal evolution of dynamic influence. Next, we show that if information is costly to acquire, the planner may prefer to consult an advocate rather than a neutral adviser. Finally, we demonstrate how an advocate gains influence with a decision maker by making his preferences for actions unpredictable. Our results have implications for a variety of real world interactions including regulation, organization, and consumer protection.
Raphael Boleslavsky and Tracy Lewis. 2011. "Advocacy and Dynamic Influence" Revision requested, RAND Journal of Economics
Available at: http://works.bepress.com/rboleslavsky/3