Nicolás Porteiro

Informational lobbying under the shadow of political pressure

We examine the incentives of an interest group to provide verifiable policy-relevant information to a political decision-maker and to exert political pressure on her. In our view information provision is a risky attempt to affect the politician’s beliefs about the desirability of the lobby’s objective. The circumstances under which political pressure can be applied specify the lobby’s valuation of different beliefs of the politician and, thus, her attitude toward risk. We identify several factors that induce risk proclivity (and thus information provision), which allows to explain the stylized fact that lobbies engage both in information provision and political pressure. Moreover, our approach gives a novel explanation for the fact that interest groups often try to provide information credibly. We finally study the extent to which this preference for credibility is robust and identify some instances in which lobbies may prefer to strategically withhold information.

Sequential Formation of Coalitions Through Bilateral Agreements in a Cournot Setting

We study a sequential protocol of endogenous coalition formation based on a process of bilateral agreements among the players. We apply the game to a Cournot environment with linear demand and constant average costs. We show that the final outcome of any subgame perfect equilibrium of the game is the grand coalition, provided the initial number of firms is high enough and they are sufficiently patient.

Common Agency Games with Separable Preferences

This paper examines the role of the revelation principle in common agency games. We show how the introduction of a separability condition on the preferences of the agent is sufficient for the revelation principle to hold. Therefore, it is still possible to restrict attention to direct mechanisms without any loss of generality even when competition over contracts is considered.

A Note on Common Agency Models of Moral Hazard

We consider Common Agency games of moral hazard and we suggest that there is only a very weak support for the standard restriction to take-it or leave-it contracts.

Coexistence of long-term and short-term contracts

We study the length of agreements in a market in which infinitely-lived firms contract with agents that live for two periods. Firms differ in the expected values of their projects, as do workers in their abilities to manage projects. Worker effort is not contractible and worker ability is revealed during the relationship. The market dictates the trade-off between sorting and incentives. Short- and long-term contracts often coexist: The best firms always use short-term contracts to hire high-ability senior workers, firms with less profitable projects use short-term contracts to save on the cost of hiring junior workers, whereas intermediate firms use long-term agreements to provide better incentives to their workers. We relate our results to the optimal assignment literature that follows Becker (1973).

An Efficient and Egalitarian Negotiation Procedure for Economies with Externalities

We construct a simple mechanism that can be used in situations when a group of well informed agents try to cooperate in the production and allocation of a good with external effects. We start by auctioning the right to have the initiative in the negotiation, then the winner proposes an allocation that is implemented if the rest of the players unanimously accept it. In case of a rejection, the process is started again. We show that the outcome of any stationary subgame perfect Nash equilibrium leads to an efficient allocation of the good with externalities, together with an equal split of the surplus that cooperation generates.

Implementing registries and results databases of clinical trials: is there a side effect?

Many parts of the world are currently witnessing a controversial discussion concerning the appropriate design of the environment for clinical trials. The catalyst of this debate has been a number of highly publicized cases in which pharmaceutical firms are accused of having selectively disclosed evidence on marketed drugs. Many participants in the discussion promote greater transparency in clinical trials and support the introduction of mandatory clinical trials registries and results databases. This report draws upon prior work by the authors analyzing the effects of these regulations on a pharmaceutical firm’s incentives to conduct clinical trials. Our findings add a new dimension to the discussion since they show the existence of a trade-off – as intended, registries and databases have the potential to increase transparency in clinical trials but they are likely to reduce the incentives to carry out clinical trials. This does not imply that these regulations are undesirable but it underlines the need for more research to be conducted on the incentive effects of these policies, because an informed policy choice must take into account all likely consequences of regulatory action and balance conflicting goals.