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Research and the Approval Process: The Organization of Persuasion

Emeric Henry and Marco Ottaviani ()

No 11939, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: An informer sequentially collects information at a cost to influence an evaluator's choice between rejection and approval. Payoffs and control rights are split between informer and evaluator depending on the organizational rules governing the approval process. We compare the performance of different organizations from a positive and normative perspective, depending on the commitment power of informer and evaluator. As a welfare benchmark we recover Wald's (1947) classic solution for a statistician with payoff equal to the sum of our informer and evaluator. We apply the analysis to the regulatory process for drug approval and to the market for new technologies.

Keywords: Approval; Information; Organization; Persuasion (search for similar items in EconPapers)
JEL-codes: D83 M38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2017-03
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