Three essays concerning information transmission

The first paper investigates how interest groups use private information to influence policy decisions. A primary observation is that access to the decision maker is necessary for information transmission, and in many situations, this access is not free. Furthermore, payments directed at securing access must be committed before the ultimate outcome is determined. The decision maker's welfare depends on both these monetary payments and on how much information is transmitted. He may restrict access in order to advance these potentially contradictory objectives. Only those interest groups' which commit sufficient resources will be granted access, and be in a position to influence the ultimate decision. The model is consistent with the observations that the rents generated by policy choices may not be completely dissipated, and relatively few interest groups find participation profitable. The sensitivity of the results to the specification of the decision maker's preferences and the information structure is also investigated.The second paper considers the feedback mechanism between firms' efforts to screen potential employees and the quality of the labor pool. The model displays a complementarity: where available workers are of lower quality on average, firms will optimally commit more resources to hiring only the most qualified. More stringent screening returns more under-qualified workers to the unemployed pool, which further lowers its quality. This framework allows us to consider the impact of changes in the environment, e.g., the introduction of web-based testing services which lowers the cost of screening potential employees.The final paper investigates the job-offer decisions of ranked institutions. The motivation is the academic job market, where differences in prestige between schools is well known. Firms cheaply learn something about a candidate's quality through an interview, but actually making an offer is costly in terms of opportunity cost. We show that a lower ranked firm will want to take a "flier" on the best candidates, even though they are the most likely to attract a better offer. When the firms can delay making offers, the lower-ranked firm prefers to wait to make offers until after the higher-ranked firm has made its offers.