The Perils of Friendly Oversight

Dino Gerardi, Ignacio Monzon and Edoardo Grillo

No 16100, CEPR Discussion Papers from Centre for Economic Policy Research

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 and the status quo alternative is not too attractive.

Keywords: Information transmission; Moral hazard; Oversight; Persuasion (search for similar items in EconPapers)
JEL-codes: D72 D73 D82 D83 (search for similar items in EconPapers)
Date: 2021-05
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Related works:
Journal Article: The perils of friendly oversight (2022)
Working Paper: The Perils of Friendly Oversight (2022)
Working Paper: The Perils of Friendly Oversight (2021)
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