Essays in political economy

Abstract

In the first chapter, I study the effect of disclosing the private interests of decision-makers on the quality of the decisions that are eventually taken. I focus on a delegation relationship where decision makers motivated by career concerns try to build up their own reputation. When private interests of decision makers are not disclosed, taking the correct decision is the only way to increase reputation and the higher the career concerns the more likely it is that correct decisions are taken. When private interests are disclosed, decisions not aligned with these private interests may also increase reputation. I find that, contrary to the common wisdom, disclosure of private interests can induce worse decisions. This happens when the salience of career concerns is high enough and decision makers are poorly informed. In the second chapter, I analyze how voters optimally aggregate and use information provided by informed biased experts. I find that, when citizens do not observe the individual bias of each expert and their biases are sufficiently correlated, the relationship between the share of experts endorsing an alternative and the share of citizens voting for it is non-monotonic. The explanation is that consensus among experts can be reached either because all experts share the same information or because experts ignore the information they have and provide their advice according to their own biases. In the third and last chapter, co-authored with Giovanni Andreottola, we present a model of a media market in which a set of news outlets compete to break a news. In our model, each media receives some information on whether a politician in office is corrupt. Media outlets can decide whether to break the story immediately or wait and fact-check, taking into account that if another media breaks the news, the profit opportunity disappears. We show that as the number of competitors increases, each outlet becomes more likely to break the news without fact-checking. Therefore, as the number of media increases, the incumbent politician is more likely to be accused of corruption by the media: this makes the re-election of incumbents more difficult and increases political turnover. In particular, we show that if voters consult with higher priority the media outlets that report about a scandal, increasing the number of competitors decreases the probability of having an honest politician in office.