A Signal-Jamming Model of Persuasion: Interest Group Funded Policy Research

Abstract

This paper analyzes a simple model of policy making under uncertainty in the presence of an interest group that may fund and lobby research. In the model, if research is not disclosed via lobbying it enters the public domain, and subsequently is randomly observed by the policy maker. Consequently, the interest group strategically chooses both whether to fund research, and whether to lobby it versus let it be randomly observed. The main result is that for a range of parameter values, in equilibrium the interest group sometimes funds, but never lobbies, research. This behavior effectively “jams” the public signal of the policy maker, making the policy choice worse on average. This occurs despite all research being unbiased. The results provide qualified theoretical support for the value of research funding transparency and implications for the interpretation of interest group funded research.

Keywords: Persuasion Games, Research Funding, Information Search, Informational Lobbying, Disclosure, Climate Change

JEL Classification: D72, D82, D83, Q54