One Voice: the Role of Organization in Lobbying

• In Event: Bargaining and Organizing

Abstract

Organized interests can persuade policymakers by presenting them with credible information. But what makes the information of organized interests credible? Existing accounts argue that credibility arises from the alignment of preferences or the existence of costly mechanisms for producing verifiable information. Investing in verifiability is sometimes impossible, however, and lobbying can even occur in environments where policymakers are uncertain about the preferences of lobbying organizations. In such contexts, how do organized interests establish credibility? In this article, we explain organizational credibility through what we call norms of aggregation. In our model, a policymaker attempts to set a policy that balances the interests of various groups. The true preferences of the groups are unknown and can only be conveyed via costless position-taking. When left to their own devices, interests groups take exaggerated positions. As a result, no information is transmitted in equilibrium. We call this decentralized cheaptalk. On the other hand, the interest groups can join an association that conveys a cheaptalk message on behalf of its members. We call this centralized cheaptalk. In such an equilibrium, associations ex ante commit to a particular “norm of aggregation,” which is a rule for how the organization will combine the preferences it observes among membership. We show that “talking” through an association helps information transmission. Interest groups with certain preferences select into the association because of membership cost and therefore reduces the uncertainty that the policymaker faces. Moreover, the norms of the association, when considered as an incentive-compatible mechanism, reduce the members' incentive to exaggerate their preferences. Thus, centralized cheaptalk outperforms decentralized cheaptalk. We consider the implications of various norms on the signals that the association sends, including unanimity, majoritarian and auction-based mechanisms. We also examine how the policymaker responds to organizational signals when its norm is variously common knowledge and when it is unknown, and also which norms will be selected endogenously by profit-maximizing associations.

Authors

• Christopher Miao Li, Florida State University

• Brian Daniel Libgober, University of California, San Diego