Research and the Approval Process: The Organization of Persuasion

Emeric Henry and Marco Ottaviani

American Economic Review, 2019, vol. 109, issue 3, 911-55

Abstract: An informer sequentially collects and disseminates information through costly research to persuade an evaluator to approve an activity. Payoffs and control rights are split between informer and evaluator depending on the organizational rules governing the approval process. The welfare benchmark corresponds to Wald's classic solution for a statistician with payoff equal to the sum of informer and evaluator. Organizations with different commitment power of informer and evaluator are compared from a positive and normative perspective. Granting authority to the informer is socially optimal when information acquisition is sufficiently costly. The analysis is applied to the regulatory process for drug approval.

JEL-codes: D82 D83 I18 L51 L65 O31 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20171919
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Citations: View citations in EconPapers (42)

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Working Paper: Research and the Approval Process: the Organization of Persuasion (2019)
Working Paper: Research and the Approval Process: the Organization of Persuasion (2019)
Working Paper: Research and the Approval Process: The Organization of Persuasion (2017)
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