Discretion and Partisans

Economics

Further details

(with Giuliana Palumbo)

We study the organization devoted to resolve disputes between parties, when decision-makers have vested preferences and some information is not contractible. We show that delegating information provision to interested parties helps to keep the incentives of the decision-maker in line. The result follows from (i) the existence of a link in equilibrium between the parties' incentives to manipulate information and their amount of monitoring of the decision-maker, and from (ii) the interested parties having known and opposing goals.

Our further finding suggests that delegation of information provision to interested parties is valuable when the decision-maker is granted high discretion. When discretion is low, information provision is better assigned to a more impartial investigator. This helps rationalize some organizational arrangements that are commonly observed in the context of judicial and antitrust decision-making.