A Delegation-Based Theory of Expertise

Abstract

We investigate competition in a delegation framework, with a coarsely informed principal. Two imperfectly informed and biased experts simultaneously propose action choices. A principal with a diffuse prior, and only being able to ordinally compare the two proposals, has to choose one of them. The selected expert might receive a bonus payment. We show that having a second expert benefits the principal, even if the two experts have the same biases and the bonus of the winner is zero. In contrast with other models of expertise, in our setting the principal prefers experts with equal rather than opposite biases. Increasing the bonus brings experts closer to truthful reporting, but this only benefits the principal up to a threshold level, with further increases in the bonus strictly decreasing her payoffs. A methodological contribution of our paper is characterizing restrictions on the set of strategies which allows a formal generalization of ex ante expected payoffs to games with diffuse prior.

Electoral Ambiguity and Political Representation

“…By contrast, Martinelli and Matsui (), Heidhues and Lagerlof (), Kartik, Squintani, and Tinn (), and Ambrus, Baranovskyi, and Kolb () consider models in which politicians are privately informed about a policy‐relevant state prior to the election.…”

“…The focus on a single voter is for ease of exposition; we later consider a heterogeneous electorate in which there is a decisive median voter.6 By contrast,Martinelli and Matsui (2002),Heidhues and Lagerlof (2003),Kartik, Squintani, and Tinn (2014), andAmbrus, Baranovskyi, and Kolb (2015) consider models in which politicians are privately informed about a policy-relevant state prior to the election.…”

(Almost) efficient information transmission in elections

“…Hence, party 1 is elected with probability 1 if and only if its announced policy is closer to their most preferred policy,x. This property allows us to directly compare our results to the ones in Ambrus et al (2017) and Kartik et al (2015), in which voters have a quadratic loss function of being away from their most preferred policy. We further assume that ties are broken randomly at equilibrium so that each party is elected with probability 1/2 when no off-path 5 policy platform is chosen by any party and voters are indifferent between the platforms x 1 and x 2 (given their belief µ(x 1 , x 2 )).…”

“…An interesting extension of our model would be to analyze whether asymmetric equilibria, similar to the one characterized in this paper, may exist also under a continuous state and signal space, in a setting similar to the one of Ambrus et al (2017). Furthermore, it is not obvious how the equilibrium outcome would change if parties have biased preferences.…”

“…14 Also in Ambrus et al (2017), voters can benefit from a small amount of office-motivation, while higher levels adversely affect welfare. The underlying mechanisms that lead to this result are, however, different than in our model.…”