The Perils of Friendly Oversight

36 Pages Posted: 14 May 2021

See all articles by Dino Gerardi

Dino Gerardi

Yale University - Cowles Foundation

Edoardo Grillo

University of Turin - Collegio Carlo Alberto

Ignacio Monzón

University of Turin - Collegio Carlo Alberto

Date Written: May 1, 2021

Abstract

In democratic societies, politicians craft reform proposals which are then subject to the scrutiny of external authorities. Politicians want their proposals approved and can work to improve their quality. Authorities have their own agendas: they may be in favor or against the reforms under their scrutiny. We study how the authority’s agenda affects the likelihood that a reform is approved and its quality. We show that an authority in favor of a reform can be detrimental towards its approval. This happens when it is easy to incentivize the politician’s work and the status quo alternative is not too attractive.

JEL Classification: D72, D73, D82, D83

Suggested Citation

Gerardi, Dino and Grillo, Edoardo and Monzón, Ignacio, The Perils of Friendly Oversight (May 1, 2021). CEPR Discussion Paper No. DP16100, Available at SSRN: https://ssrn.com/abstract=3846210

Dino Gerardi (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-3562 (Phone)
203-432-5779 (Fax)

Edoardo Grillo

University of Turin - Collegio Carlo Alberto

Ignacio Monzón

University of Turin - Collegio Carlo Alberto ( email )

Piazza Vincenzo Arbarello, 8
Torino, 10122
Italy

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