nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2013‒01‒19
two papers chosen by
Walter Frisch
University Vienna

  1. The Dynamic Effects of Information on Political Corruption: Theory and Evidence from Puerto Rico By Gustavo J. Bobonis; Luis R. Cámara Fuertes; Rainer Schwabe
  2. Observability of information gathering in agency models By Hoppe, Eva I.

  1. By: Gustavo J. Bobonis; Luis R. Cámara Fuertes; Rainer Schwabe
    Abstract: Does the disclosure of information about corrupt activities induce a sustained reduction in corruption? We use longitudinal data on audits of municipal governments in Puerto Rico to answer this question. We find that corruption is lower in municipalities audited before an election. However, these municipalities do not exhibit decreased levels of corruption in subsequent audits. Mayors in municipalities audited preceding the previous election have higher re-election rates, suggesting that audits enable voters to select more competent politicians. We present a political agency model that rationalizes the observed short-term and dynamic effects of information on corruption and re-election rates. We conclude that audit programs must be timely, sustained, and long-term commitments in order to be effective.
    Keywords: Corruption, information, political agency.
    JEL: D72 H41 K42 O17
    Date: 2012–12
  2. By: Hoppe, Eva I.
    Abstract: We consider an adverse selection model in which the agent can gather private information before the principal offers the contract. There are two scenarios. In scenario I, information gathering is a hidden action, while in scenario II, the principal observes the agent's information gathering decision. We study how the two scenarios differ with respect to the agent's expected rent, the principal's expected profit, and the expected total surplus. In particular, it turns out that the principal may be better off when the agent's information gathering decision is a hidden action.
    Keywords: Hidden information; adverse selection; information gathering
    JEL: D86 D82 C72
    Date: 2013–01

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