This paper examines the relationship between environmental pressure groups and environmental policy makers. Environmental pressure groups are assumed to possess valuable private information on environmental issues. Environmental pressure groups are also assumed to pursue their own preferences, which are only partially correlated with policy makers' preferences. A new aspect is that binding contracts with side payments are not allowed, which accurately describes the interaction between environmental pressure groups and governments. It is shown that by choosing probabilities of acting on environmental pressure groups' signals, a decision maker can force environmental pressure groups to reveal superior information even in the absence of binding contracts.
- Asymmetric information
- Environmental decision making
ASJC Scopus subject areas
- Economics and Econometrics
- Management, Monitoring, Policy and Law