Strategic Diversion

Working paper


Interest groups often make public statements when they try to influence policies. Many times the predictions they make turn out to be extremely off the mark. Why would interest groups publicly make such bad predictions if they know they might suffer reputation costs? One potential explanation is that they use the communication strategically to divert attention from issues which are potentially harmful for their interests. In doing so, they force competing interest groups to spend scarce resources on countering the claims, rather than digging up critical aspects of the bill which might jeopardize its acceptance. I analyze this mechanism in a formal model and propose a mechanism which might help reduce this problem.