Why principals tolerate biases of inaccurate agents

Kimiko Terai, Amihai Glazer

Research output: Contribution to journalArticle

Abstract

Some agents are more accurate than others in estimating the best policy. The more accurately an agent estimates a policy's effects, the more he will resist biases, such as bribes from a special interest. Thus, a special interest needs to pay a larger bribe to an accurate agent than to an inaccurate agent. The accurate agent who is biased will then more likely cause harm than does an inaccurate agent who favors the special interest. Therefore, the principal may gain more from controlling biases of an accurate agent than of an inaccurate one. Thus, high ability of public officials may be associated with little corruption.

Original languageEnglish
JournalEconomics and Politics
DOIs
Publication statusAccepted/In press - 2018 Jan 1

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Keywords

  • bureaucracy
  • principal-agent problem
  • special interests

ASJC Scopus subject areas

  • Economics and Econometrics

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