Expert advisers who are unbiased put the most effort into providing high quality information to policy-makers. Yet strongly biased policy-makers may be reluctant to hire unbiased advisers. These are among the conclusions of research by Dr Robert Dur and Professor Otto Swank, published in the Economic Journal. What policy-maker wouldn’t at least occasionally jump at the chance of having a look into the future to see the outcomes of certain policies?
Since the consequences of many policies are complicated and difficult to foresee, policymakers often try to ward off failure by asking experts to provide information on the likely effects of policies. Sometimes, the expert already possesses the information; often, the information has to be produced. This research report is concerned with situations in which a policy-maker needs information that must be produced. An expert must therefore be motivated to collect the information. But the policy-maker will be uncertain how much effort an expert has put into acquiring information. Better information does not always lead to thicker reports.
Moreover, when an expert has an interest in the policy outcome, he or she may manipulate information to distort policy decisions. The research shows that experts who are unbiased towards the policy outcome put the greatest effort into collecting information. The reason is that a strong bias in favour or against a policy reduces the probability that new information will affect the expert”s opinion. Neutral experts thus produce information of high quality.
Perfect communication, however, requires that the preferences of the policy-maker and the expert coincide. For example, a policy-maker who is strongly biased against implementing a particular policy may be reluctant to hire a neutral expert, because such an expert will too often recommend implementation of the policy. Hence, when selecting an expert adviser, a policy-maker faces a trade-off between the quality of the information produced and the extent of communication.
”Producing and Manipulating Information” by Robert Dur and Otto Swank is published in the January 2005 issue of the Economic Journal. The authors are at Erasmus University Rotterdam, PO Box 1738, 3000 DR Rotterdam, The Netherlands.
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