Organization of Informative Committees by a Rational Legislature

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Organization of Informative Committees by a
Rational Legislature

• Gilligan and Krehbiel (1990) in AJPS

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Outline

• Basic puzzle and research question
• Informational Efficiency
• Players and their utility functions
• Game in 3 stages
• Examples
• In equilibrium
• Out of equilibrium

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Basic Puzzle

• Legislators know what policy outcomes are
  desired by their constituents but not what
  legislation will yield desired outcomes (536).
• Common solution create committee system

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Research Question

• How does a legislature motivate a committee to
  specialize and share the informational benefits
  of that specialization?
• Gilligan and Krehbiels argument Legislatures
  strategically manipulate the assignment of
  members and the transfer of resources to that
  committee.

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Informational Efficiency

• Legislators operate under imperfect information
• x p w, where
• x is the outcome in a 1-D policy space
• p is the policy, and
• w is the uncertainty, a uniformly distributed
  (i.e. constant probability) random variable

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Informational Efficiency
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Players and the utility functions

• 2 players the legislature and a committee
• Legislatures ideal point xl 0
• Committees ideal point xc 0
• Legislatures utility ul -x2 r
• Committees utility uc -(x-xc)2 - sk

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Game in 3 stages
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Stage 3 Legislative game

• Symmetric uncertainty
• Common knowledge that neither player has private
  information
• Legislatures best response is to ignore the
  committee and select the policy that maximizes
  its expected utility given the distribution of
  the random variable (546).
• Bottom line If the committee does not do any
  work, the legislature does not pay any attention
  to it.

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Stage 3 Legislative game

• Asymmetric information
• If committee precisely reveals its private info
  about w, legislature has incentive to roll it
  (i.e. to use the info about w to select the
  policy that leads to its own ideal point).
  Rational committee will not do this.
• As the committees ideal point moves further from
  the legislatures ideal point, the committee has
  less incentive to provide useful information to
  the legislature.

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Stage 2 Committee specialization

• Cost incurred by the committee when it
  specializes
• k k0 kcxc krr, where
• k0 is the committees opportunity cost
• kc is the comparative advantage coefficient
• kr is the resource efficiency coefficient

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Stage 2 Committee specialization

• Equilibrium
• Committee will specialize only if the
  informational benefits are greater than the costs
  of specialization
• In other words, the committee will specialize
  when it thinks that the benefits it receives from
  knowing w (i.e. choosing a policy that is more
  likely to lead to its ideal point) exceed the
  costs of specialization
• Therefore, the greater the uncertainty and the
  lower the costs, the more likely the committee is
  to specialize.

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Stage 1 Legislative Organization

• Equilibria
• If uncertainty is low and committee expertise
  costly, legislature prefers symmetric uncertainty
  and will a) allocate no resources and b) pay no
  attention to the assignment of committee members
• However, as uncertainty grows, the legislature
  will manipulate committee assignments and
  resources to maximize its informational benefits

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Stage 1 Legislative Organization

• Comparative statics
• As uncertainty increases, the legislature will
  seek to reduce the distance between its ideal
  point and that of the committee by modifying the
  committees membership.
• As the opportunity costs of specialization to the
  committee increase, the legislature will allocate
  more resources to the committee (defraying the
  costs and inducing specialization)
• If new specialist members elected (e.g. former
  farmers), legislature would assign them to the
  agriculture committee in order to reduce the
  committees cost of specialization (and thus
  reduce the amount of transferred resources)

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Picture
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Examples in equilibrium
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Examples out of equilibrium