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The Perils of Friendly Oversight

Dino Gerardi, Edoardo Grillo and Ignacio Monzon ()
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Dino Gerardi: Collegio Carlo Alberto, University of Turin

No 122, Working Papers from Red Nacional de Investigadores en Economía (RedNIE)

Abstract: Decision makers often rely on experts’ evaluations to decide on complex proposals. Proponents want the approval of their proposals and can work to improve their quality. The scrutiny of experts ought to push proponents to work harder, leading to high-quality proposals. Experts, however, have their own agendas: they may favor or oppose the proposals under their scrutiny. We study how the expert’s agenda affects the likelihood that proposals are approved and their quality. We show that an expert in favor of a proposal can be detrimental towards its approval. This happens when it is easy to incentivize the proponent to work and when 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)
Pages: 35 pages
Date: 2022-03
New Economics Papers: this item is included in nep-mic
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https://rednie.eco.unc.edu.ar/files/DT/122.pdf (application/pdf)

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Working Paper: The Perils of Friendly Oversight (2021) Downloads
Working Paper: The Perils of Friendly Oversight (2021) Downloads
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