Regulate to promote information sharing – RPIS

“Well-informed, people are citizen; badly-informed they become subject.”
Alfred Sauvy, 1960, Le plan Sauvy

Collecting and using information efficiently are at the centre of public concerns (environmental, health, financial, food, industrial, technological, nuclear, and terrorist hazards). The objective of this research program is to study how information can efficiently be transmitted and aggregated in a context of strategic behavior. Information manipulation is not an ad hoc anomaly but a predictable response to unusual incentives. Unfortunately, the consequences of information withholding can be dramatic (e.g., subprime financial crisis, weak political responses to global warming). We seek to identify incentives conditions that make it possible to regulate institutions, and more generally designing framework, within which agents reveal voluntarily – i.e., even by the mere pursuit of their own interests – information that are socially welfare-enhancing.
We would like to answer the following political sciences relevant questions: What consequences have belief manipulation on political decisions concerning a reform? Which liabilities and rewards an expert should be subject to for preventing any strategic distortion of information? How to efficiently split decision making between experts’ committees and politicians? How to aggregate information and take efficient decision collectively? Is any deliberative procedure or voting rule providing better incentive for committee members to fully share their information and reach an agreement? Should any expert be consulted separately or within a committee?
The project would also concern economics and finance as it would consist in applications to the informational efficiency of both financial markets (with a study of the current subprime crisis, corporate finance), and industrial market (competition, bargaining).
To deal with such issues we would use the tools of game and contract theories. Although such tools have been of very little use in political science, it seems that they offer great potential (see, e.g., Mathis 2010). Our approach would allow theoretical studies – yielding to publication in top academic journal in economics, political science, and finance – but would also offer implementable solutions. For instance, Mathis-McAndrews-Rochet, 2009, is a theoretical article that also recommends how to regulate the credit rating industry in practice, a proposal that is actually discussed by the United States Congress.



MATHIS, J. (2010): “Deliberation with Partially Verifiable Information”, forthcoming in
American Political Science Review

MATHIS, J., J. McANDREWS and J.-C. ROCHET (2009): “Rating the raters: are reputation concerns powerful enough to discipline rating agencies?”, Journal of Monetary Economics, vol. 56: 5, pp 657–674.