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AdvocatesAuthor(s): Mathias Dewatripont and Jean TiroleSource: The Journal of Political Economy, Vol. 107, No. 1 (Feb., 1999), pp. 1-39Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/2990712

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Advocates

Mathias DewatripontEuropean Center or Advanced Research in Economics, Universitg Libre de Bruxelles

Jean TiroleInstitut d 'EconomieIndustrielle, Universite de Toulouse, Centre d'Enseignement et deRechercheen Analyse Socioeconomique,and Massachusetts Institute of Technology

The paper's main contribution is to provide a rationale for advo-cacy. After observing that many organizations (corporations, judi-ciary, and the executive and legislative branches of government)use competition among enfranchised advocates of special intereststo improve policy making, it argues that advocacy has two majorbenefits. First, the advocates' rewards closely track their perfor-mance whereas nonpartisans' incentives are impaired by their pur-suing several conflicting causes at one time. Second, advocacy en-hances the integrity of decision making by creating strongincentives to appeal in case of an abusive decision. The paper alsoanalyzes the costs of advocacy in terms of manipulation and gar-bling of information. It further shows that it may be costly for boththe organization and interested parties themselves to let these par-

We thank Philippe Aghion, PatrickBolton, Juan Carrillo,Jacques Cramer,DrewFudenberg, Leonardo Felli,KeithKrehbiel,Jean-JacquesLaffont,TracyLewis,DavidMartimort, Sherwin Rosen, Howard Rosenthal, David Sappington, Ken Shepsle,Lucy White, and a referee for helpful discussions and comments. We also benefitedfrom numerous suggestions made by attendants in seminars and in particular byseveralparticipantsat the Castelgandolfo EuropeanScience FoundationConferenceon Political Economy (September 1995). Dewatripont acknowledges support fromcontract P4/28 of the InteruniversityPoles of AttractionProgrammeof the BelgianFederal State (Prime Minister'sOffice, Federal Office for Scientific,Technical andCulturalAffairs).Tirole is gratefulfor support to the Fondazione Eni Enrico Mattei,to the CommissariatG6neraldu Plan,and to the Institutefor PolicyReform (cooper-ativeagreement between the Institutefor PolicyReformand the Agency for Interna-tional Development, Cooperative Agreement PDC#0095-A-00-1126-00).Views ex-pressedin this paper are those of the authors and not necessarilythose of the Matteifoundation, IPR, or USAID.Journal of Political Economy, 1999, vol. 107, no. 1]? 1999 by The University of Chicago. All rights reserved. 0022-3808/99/0701-0003$02.50

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2 JOURNAL OF POLITICAL ECONOMYties plead their own causes instead of being represented. The pa-per concludes with two applications to comparative legal systemsand to the organizationof Congress and with suggestions for futureresearch.

I. IntroductionIn economic models, agents are instructed to achieve the goals oftheir organizations (corporations, government, etc.). While asym-metric information and contracting problems may enable agents topursue their own agenda, incentive schemes are designed so as toalign their interests with those of the organization as well as is consis-tent with the informational and contracting constraints.Yet casual observation suggests that organizations deliberately setgoals for their members that differ from the optimization of the or-ganization's welfare (profit, social welfare, etc.). Rather, agents areexplicitly asked to defend a specific "cause." The organization isthen driven by competition among advocates for specific causes. Thearchetypal example of this can be found in courts. The defense attor-ney is expected to stand for the defendant, to the point at which heis not meant to reveal information that would be useful for the juryin reaching a decision but would hurt the defendant's case. Similarly(although to a lesser extent because of the asymmetric social costof excessively tough and lenient sentences), the prosecutor's job isto be rather tough with the defendant.' Social welfare maximizationor impartiality is not expected from them. This system of conflictand partiality has prevailed for centuries and is deemed to be anintegral piece of a democratic system.Similar situations abound in government. A first example is pro-vided by the legislature. A representative in a parliament (or in asupranational assembly) is expected to make a case for his constitu-ency, and not for the others. Similarly, multipartism is often a systemof advocates with parties representing distinct political constituen-cies. Second, regulatory hearings are a quasi-judicial process inwhich authorized interveners lobby for their own cause and proxyadvocates (such as the state attorney general and consumer counselsfor consumers) defend the cause of comparatively disorganized

' It is interesting to note that a recent (September 1995) Supreme Court decisionhas reinterpreted the Italian constitution concerning the role of prosecutors. Theirrole has traditionally been akin to that of judges in that they were considered to beauxiliaries ofjustice. The new and hotly debated interpretation goes in the directionof more advocacy in prosecution.


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ADVOCATES 3groups of citizens.2 Finally, even in the executive branch, we observethat no ministry's mandate is to maximize social welfare. The minis-try of labor is also there to defend wage earners, the ministry ofindustry to promote industry, the ministry of the environment toprotect the environment, and so forth. The prime minister arbitratesin cases of conflict.3Corporations also foster competition among enfranchised advo-cates. Union-management arbitration procedures are an obvious il-lustration. Efficient committees and boards of directors are builtaround a conflict among some members with different objectives,with more neutral members arbitrating on the basis of the casesmade. The determination of transfer prices is often based on a con-flict between divisions fostered by headquarters. This conflict gener-ates useful information. As a last illustration, it is considered accept-able that directors of plants or heads of, divisions compete forbudgets or stand for the interests of their employees (or for an aca-demic to make a case for his or her field in a department meeting)within certain rules of the game.Here we focus on the creation (or tolerance) of advocates by orga-nizations. It is not surprising that interest groups themselves act asadvocates. More interesting, a priori unbiased parties are turned en-dogenously into advocates. For example, a representative by designis made an advocate if she is elected at the district level rather thannationwide through a proportional representation scheme. A prose-cutor in an adversarial system is also an advocate by design ratherthan because of some exogenous vested interest. Similarly, officialsin the ministry of finance do not have an exogenous stake in budget-ary discipline. Our focus on "endogenous advocates" is not meantto deny the relevance of interest group advocacy, although SectionIVB will point at some limitations on the use of the latter.Competition among advocates of specific interests or causes maylead to good policy setting in organizations. We also analyze the costsof the creation of advocates. Our starting point is that the case foralternative policies or causes must be made properly. Informationthat bears on the pros and cons of those alternatives must be createdand clearly exposited. Of course, this is only a necessary conditionfor good decision making, which must also reflect this information

2 See McCubbins and Schwartz (1984) and McCubbins, Noll, and Weingast (1987)on the reliance on "special interests" and on the creation of proxy advocates forcomparatively disorganized groups. See also Dewatripont and Tirole (1997) for adiscussion of these themes.3 Note that in the executive branch example, advocates are only "weak advocates"(otherwise, why shouldn't one let farmers choose the minister of agriculture?). Weshall have more to say about weak and strong advocates in Sec. IVB.


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4 JOURNAL OF POLITICAL ECONOMYappropriately. Up to Section V, we ignore the second issue by assum-ing that, somehow, the decision is picked that is optimal for the orga-nization conditional on the information created and diffused. Thisassumption is natural whenever the interests of the decision makerand of the organization coincide. For example, the decision makercould also be the owner of the firm and be residual claimant for itsprofit. On the other hand, there may be a substantial "separationof ownership and control," which raises the issue of why the decisionmaker pursues the goals of the organization. We shall show that ad-vocacy then has an added advantage, as advocates provide a checkagainst deviant decision making.

Thus we first focus on the creation of information for decisionmaking assuming proper decision making. Section II develops thebasic model. Section III argues that a single information collectorfaces conflicting tasks when asked to gather information concerningopposing causes. Consider, for instance, a redistributional issue inwhich money can be given to A or to B or shared between the two.It is no easy task to structure incentives for an information collectorwho makes the case for both A and B by searching for grounds tofavor one or the other; for, a decision to share money between thetwo may be motivated either by a complete lack of information orby the discovery of two opposing effects. Now, it would be straightfor-ward to structure incentives if one could give direct incentives basedon the information collected, as is assumed in the literature: Theinformation collector would be rewarded more for collecting piecesof evidence favoring both even if they cancel out in decision makingthan for collecting evidence in favor of one or for collecting no evi-dence. In contrast, if rewards for information collection are indirectin that they are based only on the final decision, the reward is con-strained to be the same when two conflicting pieces of evidence arecreated and when none is created. The information collector's taskis not focused enough if he must make the case for both. We shallsee that competition between open advocates of the two causes gen-erates either more information or the same information morecheaply.Decision-based rewards are pervasive. A lawyer is paid by the plain-tiff or hired by future clients as a function of whether the case iswon and of the level of damages awarded, but not of the informationbrought to bear or of the quality of the case made by the lawyer.Similarly, politicians and parties are often rewarded by voters on thebasis of which decision was made rather than on the way in whichthe decision was reached. Representatives are often judged on whatthey obtained for their constituencies. A minister's tenure is oftenassessed by how well he fulfilled the mission of his ministry rather


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ADVOCATES 5than by the quality of the arguments he gave to defend his cause.Section II will discuss the foundations of decision-based rewards. Tobe certain (being advocates for our modeling choices), we are hereoverstating the case for decision-based rewards. Direct rewards forinformation collection and diffusion also exist, in particular, in theform of career concerns. Some close to the decision-making processwill recall not only whether the manager, bureaucrat, or politiciansucceeded in pushing his point of view but also whether a good casewas made. So, in general, we have a mixture of decision- and infor-mation-based rewards for information collection. The purpose ofthis paper is to focus on the consequences of decision-based rewardsby ignoring finer information-based rewards.As we have seen, a benefit of creating advocates is that it generatesprecious information on the pros and cons of alternative policies.One cost is that advocates have an incentive to retain informationthat is detrimental to their cause or even to forge information. Note,however, that manipulation of information occurs, albeit in a differ-ent way, when a single agent is given a nonpartisan incentive scheme;since effort provision requires him to be rewarded when the statusquo is abandoned, he will be reluctant to show conflicting pieces ofevidence about causes A and B that make the status quo desirable.Section IV looks at the manipulation of information by advocatesand nonpartisans. Section IVA gives conditions for the optimality ofadvocacy and nonpartisanship. It is interesting that it shows that thestatus quo is more likely to prevail under advocacy than under non-partisanship.Section IVB points out that the possibility of manipulating infor-mation introduces an interesting distinction between "representa-tive advocacy" and "self-advocacy." As described in the basic model,a representative advocate acts on behalf of a constituency and, unlikethe constituency, does not directly perceive the benefits of policychoices. In contrast, self-advocates defend their own causes. To becertain, a dispersed or incompetent constituency cannot be a self-advocate and needs to be represented. But sometimes parties canstand for themselves as in the case of a taxpayer confronting therevenue service, a firm lobbying for a federal subsidy, managementdefending its policy or accounts in front of shareholders, or a re-searcher stressing the merits of his or her contribution. A naturalextension of our model is to allow for the possibility of self-advocacy(when relevant). We cast the trade-off between self-advocacy andrepresentative advocacy as one of the power of the incentive scheme.The costs of self-advocacy are associated with an excessive power ofthe advocate's incentive scheme. Namely, the self-advocate mayforge information and lack credibility. In contrast, a representative


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6 JOURNAL OF POLITICAL ECONOMYadvocate, who has less powerful incentives, may only omit to revealinformation detrimental to the client. On the other hand, the bene-fit of self-advocacy is that it eliminates the incentive problems andrents associated with the use of a representative.Section V extends the basic model in another relevant direction.We have assumed that the decision is selected that is best for theorganizational goals conditional on the available information. Thispresumes that decision makers have incentives to process the infor-mation if needed, enjoy no private benefit from specific decisions(in particular, have no ideological bias), are given "neutral incen-tives," and are not bribed by the parties. While the issue of the integ-rity of the decision makers arises whether or not an advocacy systemis set up, the choice between nonpartisanship and advocacy has animpact on the level of integrity. We argue that an advocacy systemhas another advantage in the presence of nonbenevolent arbitratorsin that it creates a more reliable appeal mechanism. In an advocacysystem, there is always someone to blow the whistle on an abusivedecision maker, which is not the case under nonpartisanship.Section VI applies the insights to shed some light on standardquestions in law and political science. Section VIA compares trialprocedures in common-law and civil-law countries. It recasts the dif-ference between the two legal systems as being partly one betweenadvocacy and nonpartisanship. Section VIB analyzes a standard topicin political science, the organization of congressional committees, interms of our framework. It sheds light on the Shepsle and Gilligan-Krehbiel views on the role of congressional committees. Finally, Sec-tion VII lists several promising alleys for research, and Section VIIIsummarizes the main insights.II. The Basic ModelA. Description1. PoliciesA decisionmaker(manager, judge, or arbitrator) on behalf of a princi-pal (organization, parliament, or society) makes one of three deci-sions: A, B, and "status quo" (indexed by "zero"). Decisions A andB are to be interpreted as favoring interest groups A and B, respec-tively, and the status quo is an intermediate or moderate decision.For instance, A and B might be two constituencies (regions or divi-sions) competing for money. The status quo would then correspondto an equal division, whereas the other two decisions allocate thefull budget to one of them. Or, in a court trial, the status quo mightbe an average sentence or damage, whereas the other two decisions


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ADVOCATES 7correspond to a more lenient or tougher verdict.4 Decisions are iden-tified with outcomes. The model is perfectly symmetric between thetwo causes.2. Organizational GoalsOrganizational preferences depend on a parameter 0 e {-1, 0, 11,where 0 = OA + OB. The parameter OA is equal to negative one withprobability ct and zero with probability 1 - cx. Similarly, the parame-ter OB s equal to one with probability a and zero with probability 1- t. The two parameters are independently distributed, and so

[-1 with probability c (I - cx)0 = +1 with probability c (I - ct)LO with probability 1 - 2a(1 - ct).

The organization's preferences are single-peaked. Underfull informa-tion, the organization would choose decision A for 0 =-1, decisionB for 0 = + 1, and the status quo for 0 = 0.5 So, OA =-1 and OB =+ 1 are to be interpreted as pieces of information favorable to causesA and B, respectively. The status quo obtains when either there isno case for either cause or there is information favorable to bothcauses.6

3. Information CollectionTo learn its preferences the organization must use agents to collectinformation about OA and OB. To collect information relative to causei (i = A, B), an agent must incur unverifiable disutility of effort K.If he does not incur K, the agent learns nothing (which we shalldenote by 0). If he incurs K and Oi = 0, the agent learns nothing.If he incurs K and I il = 1, the agent learns nothing with probability1 - q and obtains with probability q hard, positive evidence Pi that1IN = 1.

'The status quo should thus not necessarily be interpreted as "immobilism."Rather, the status quo stands quite generally for a moderate outcome, even whenthis outcome results from, but does not coincide with, a prior decision. For example,when a legislature adjusts the minimum wage, the zero point is the decision thatwould be made solely on the basis of prior information. Decisions A and B wouldbe either a larger or a smaller increase.'For example, the organization has preferences - k(O)(y - 0)2, where y = -1for decision A, = 0 for the status quo, and = + 1 for decision B and k(O) is a positive8-dependent constant.'The assumption that both pieces of information exactly cancel out is only a sim-plifying assumption, as a model with a continuum of decisions would confirm.


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8 JOURNAL OF POLITICAL ECONOMYAs a first step, we assume that the evidence is nonmanipulable. Thatis, once created, the hard evidence cannot be concealed and auto-matically becomes the property of the organization and is used fordecision making. (Alternatively, there is some probability that infor-mation concealment is detected and severely punished. Later, weshall introduce two related concepts of manipulability, in which theagent is able to hide the hard information [concealable informa-tion] or to forge information [forgeable information], and we shallask whether the manipulation of information should be punishedif it is detectable.)We assume that each cause is investigated by one agent. That is,

the duplication of information collection is very costly.7 The key or-ganizational issues will be whether the same agent investigates thetwo causes, or whether tasks are allocated to two distinct agents, andthe form of incentives these agents receive. For reasons that will be-come clear later, we shall sometimes refer to the one-agent case asthe "nonpartisan case" and the two-agent case as the "advocatecase. 8Under imperfect nformation about the organization's preferences,the decision maker picks the organization's optimal decision condi-tionally on the available information. She may make one of two typesof errors. Decision making exhibits inertia (or "excess budgetspreading," depending on the application) when 101 = 1, and yetthe status quo prevails over the efficient cause. Let LI denote theloss incurred by the organization under inertia. Conversely, theremay be extremism.The loss when 0 = 0 and one of the two causesis embraced is denoted LE. Finally, let LM denote the loss incurredby the organization when 0 = -1 and cause B is selected or when0 = +1 and cause A prevails (LM is the loss from "misguided ac-tivism").Let x aq denote the unconditional probability of collecting in-formation favorable to a cause when spending K to investigate thiscause (it is equal to the probability oxthat there exists such favorableinformation times the probability q of discovering this information).The posterior belief 't that IOjI= 1, conditionally on no informationfavorable to cause j having been discovered, is given by

ca(I-q) a- xCo-)+=


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ADVOCATES 9While LE and LI are the losses for the organization when it hasfull information that the status quo, respectively one of the causes,is optimal and when it makes an inefficient decision, we must intro-

duce their counterparts LE and LI corresponding to the expectedlosses conditional on the agents' imperfectnformationwhen a wrong deci-sion is made (for the purpose of computing LE and LI, we assumethat the agents have exerted effort and that the organization has theagents' information).First, suppose that the information is (P, PB). That is, there is apiece of evidence in favor of cause B and none received in favor ofcause A. Because the posterior probability that OA = -1 is a, theexpected loss from choosing cause B is ALEand the expected lossfrom choosing the status quo is (1 - &)LI. We assume that the opti-mal decision is to choose cause B.

ASSUMPTION 1. LI (1 - C)L I- &LE > 0Second, we also assume that it is optimal to choose the status quowhen no information is received: Suppose that the agents' infor-mation is (0, 0). The expected loss from choosing the status quo is2&(1 - 6) LI, and the expected loss from choosing one of the causesis [1 - 2&(1 - 0)]LE+ (1 -)LM. The expectedlossfrommovingaway from the status quo when the agents have no evidence in favorof either cause is positive when the following assumption is made.

AsSUMPTION2. LE=(1-a) (LM-2LI) + [1 -2(1 --)]LE> 0.This condition is always satisfied when LM' 2LI, as one wouldexpect.Finally, we assume that Kis not too large relative to the stakes (LIand LE), so that the organization always wants to induce the collec-tion of information about the two causes. So, in equilibrium therewill be "full information collection" (which does not mean that theorganization is perfectly informed with probability one) rather than"limited information collection." We shall also provide conditionsunder which the organization avoids duplication of effort, that is,the collection of the same information by two agents (proposition1 below does not require such a lower bound on K).4. Agents' PreferencesUntil Section IVB the agents are distinct from the interest groups.They derive their rewards from information collection either in theform of monetary compensation tied to the decision or in the formof reputation (career concerns). They do not internalize the directbenefits of the decision, which go to the interest groups. Career con-cerns seem more relevant in a number of our examples, but the caseof monetary rewards is analytically slightly simpler. So, we shall work


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10 JOURNAL OF POLITICAL ECONOMYmainly with monetary rewards but must check that our insights arerobust to the introduction of career concerns. The key assumptionis that under both paradigms the agents' rewards are based solelyon the decision.Monetary rewards.-Unless otherwise specified, an agent receivesa decision-contingent monetary reward w. Agents are risk neutraland are protected by limited liability, w ? 0. An agent's utility fromreceiving wage w and exerting effort on n tasks (n ' 2) is w - nK.Agents' reservation utility is equal to zero.Careerconcerns.-See Section IIIB and Appendix B for a descrip-tion.B. The Decision-Based RewardsAssumptionSince decision-based rewards have hitherto not been analyzed, it isworth investigating which factors lead to such rewards. (This subsec-tion is of interest only to those interested in foundations and canbe skipped by other readers.)There are two related conceptual underpinnings for decision-based rewards. First, the advocate may act on behalf of a dispersed,free-riding constituency (e.g., workers or voters). While the decision(high wage or subsidy) is easily observed by the members of the con-stituency, they have little individual incentive to exert the effort re-quired to learn the details of the case made by the advocate or itsquality. Second, the advocate may act on behalf of a concentratedbut ignorant constituency as in the case of a trial. Describing ex anteand measuring the quality of the legal case, say, can be infeasiblefor the plaintiff or the defendant, who must therefore rely on a lesspowerful but cheaper decision-based reward. While these two argu-ments provide the intuition behind the use of decision-based re-wards, they are incomplete in that they do not explain why the deci-sion makers (court, legislature, headquarters, etc.) who process theadvocates' information and reach a decision on its basis do not ad-minister direct rewards and punishments for the advocates. If wetrust the decision maker to pick decisions, why don't we also trusther to allocate rewards?Consider first the case in which the decision maker and the princi-pal are the same person. For example, the owner of the firm allo-cates an investment budget to one of two divisions. Suppose thatonly the decision (A, B, or status quo) is verifiable and that the deci-sion maker promises a reward that reflects not only the decisionbut also the (observable but unverifiable) information on which thedecision is based. However, the principal, when confronted with twooffsetting pieces of information (one in favor of each cause),


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ADVOCATES 11chooses the status quo and has an incentive to argue that she ob-tained no useful information in order to minimize the compensa-tion paid to the agent(s). So, for example, with a single agent, thefeasible incentive schemes {WA, WB, Wo, W2} (corresponding to onepiece of information favorable to A, one favorable to B, no piecesof information, and two pieces of information) must satisfy wo =w2, that is, be indirect reward schemes.9 We conclude that when thedecision maker is the principal, sequentially optimal decisions neces-sarily maximize organizational goals and direct reward schemes areinfeasible.Providing direct rewards may be equally difficult when the deci-sion maker acts on behalfof the principal. Contingent on a status quodecision, the level of salary (woor w2) is a purely redistributive issue.Hence, if the decision maker (who does not pay the agent's salaryherself) has an arbitrarily small pro-agent (or anti-agent) bias-thatis, puts at least slightly higher (or lower) weight on the agent's utilitythan on the rest of the organization-she will choose the highest(or lowest) of woand w2, and so we can assume as well that wo = w2and hence that rewards are indirect. By contrast, a small enoughpro- (or anti-) agent bias does not impair the integrity of decisionmaking. So, wage setting is more sensitive than decision making toa pro- (or anti-) agent bias, and direct rewards cannot improve onindirect ones.More formally, and in either case, one can show that (a) with twoagents, a complete contract does not improve on decision-based re-wards (this is obvious from proposition 1 below) and (b) with a singleagent, under some conditions complete contracts again provide noimprovement over decision-based rewards: see Appendix A.III. The Case for AdvocacyA. Explicit Incentive SchemesWe first show that under nonmanipulability of information andmonetary incentives an advocacy system is strictly optimal.'0

9 We assume that the transmission of the two pieces of information is simulta-neous.10For the following comparison to be meaningful, one must impose conditionsguaranteeing that eliciting two efforts is optimal. So we need to look at the losseswith zero and one effort. With zero effort, the loss is 20x(1 - c)LI. One effort isbetter than zero only if hard information leads one to move in that direction. Onthe other hand, the status quo will prevail if no information has been found, pro-vided that LM s high enough. Consequently, the loss with one effort is

XOcLE (1 - x) [ox(1 - a) + x(1 - x)]LI + K= &X2qLE+ x(1 - x) (2 - q)LI + K.


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12 JOURNAL OF POLITICAL ECONOMY1. Single Agent (Nonpartisanship)Suppose that a single agent is in charge of both tasks. Let WA, WB,and wo denote wages when A is selected, when B is selected, andwhen the status quo prevails. The agent has net utility wowhen notinvestigating at all, xwj + (1 - x)wo - Kwhen investigating causei, and

x(1 - X) (WA + WB) + [1 - 2x(1 - x)]wo - 2Kwhen investigating both causes. Incentive compatibility requires thatthe agent prefer investigating both causes to investigating one ornone. A quick inspection of the incentive constraints shows that itis optimal for the organization to set symmetric rewards WA = WB =w." This yields

x(l-2x) (w-w o)K (1)and

x( -x)(w - wo) ? K. (2)Constraint (1) says that the agent prefers investigating two causesrather than one. When one is exerting effort in a first task, exertingeffort on the other task adds an extra effort cost K; with probabilityx, the investigation of this second cause is successful, which benefitsor hurts the agent. With probability 1 - x, the search on the firsttask is unsuccessful; the discovery on the second task then movesthe decision away from the status quo and increases the agent's re-ward by w - wo.With probability x, however, the second discoveryoffsets the first one and reduces the reward by w - wo.So under theassumption that w > wo (which constraint [2] requires), the seconddiscovery is beneficial to the agent if and only if 1 - 2 x > 0 or x WB. Then reducing WA and increas-ing WB by the same small amount keeps the payoff under full investigation constantwhile reducing the maximum payoff under partial investigation.


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ADVOCATES 13We thus have two cases: If x ? 1/2,there is no wage structure thatinduces full investigation. If x < 1/2,the cost-minimizing scheme in-ducing full investigation is wo = 0 and (from constraint [1], which

is the only binding constraint in this case)KW = x(I - 2x)

The agent then enjoys rentU= 2x(1-x)w-2K 2X K.1 - 2x

In this second case, the agent is not partisan since he looks for rea-sons to favor either cause. But he is an activist in the sense that heis better off moving policy away from its status quo. While surprisingat first, the activism of nonpartisans is actually quite realistic. It israre that a president, a chief executive officer, or a consultant hiredby a corporation concludes, after taking his function and analyzingthe situation, that nothing is to be changed. His incentive is clearlyto get things moving in some direction.'22. Two Agents (Advocacy)Suppose now that two agents are hired, who are each in charge ofinvestigating one cause. The organization can then obtain the firstbest despite this incentive problem. Namely, it can pay agent i, incharge of cause i, wo = wj = 0 if the status quo or decision j (j ? i)is chosen and wi = K/ [x( - x) ] if decision i is selected. The agentthen obtains wo= 0 by shirking and x( 1- x) wi - K = 0 by exertingeffort." So this incentive scheme both induces effort and fully ex-tracts the agent's rent.'4 Competition between the two agents thusallows the organization either to obtain more information (if x>1/2) or to obtain the information at a lower cost (if x < 1/2).

12 For example, consultants will propose a new management strategy. Or Frencheducation ministers almost always push for a reform of programs (which often un-does what their predecessors had done a year or two earlier and reverts to someprevious policy). There are exceptions to activism (which are not inconsistent withour model). For example, consultants may be hired by the CEO to be servile andsupport existing corporate policy. These sycophants are obviously given the wrongincentives.

13 Both agents' exerting effort with probability one is the unique Nash equilibriumif wi = {K/ [x(1 - x)]} + E for arbitrarily small E > 0; for if agent j exerts effortwith probability e E [0, 1], agent i obtains utility x(I - x)w - K > 0. So, exertingeffort is a strictly dominant strategy.14 The first-best result is of course an artifact of risk neutrality and is thereforenot to be stressed.


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14 JOURNAL OF POLITICAL ECONOMYWith two agents, it is easy to leave them no rents by giving eacha positive wage only if he succeeds in moving policy away from thestatus quo in his favor: In this case, an agent has no rent when ex-

erting no effort. In contrast, with a single agent, inducing the secondeffort means offering a wage that leaves the agent a rent if he per-forms a single effort. Consequently, it is always more expensive toinduce two efforts with a single agent. This result is robust to a gener-alization to continuous effort levels, even though advocates then re-ceive positive rents.'5Introducing competition between agents may be reminiscent ofthe idea of relative performance evaluation (e.g., Holmstr6m1982b). In that literature, the goal is to obtain a performance mea-sure that is more informative about effort by filtering out commonrandom shocks. Here there is no correlation between the informa-tion technologies. Instead, separating the tasks between two agentsmainly allows the observable decision variable to become monotonicin each effort decision, as in traditional moral hazard models.Our insight is also related to multitask analyses (Holmstr6m andMilgrom 1990, 1991), where otherwise nonconflicting tasks maycrowd each other out because both use the same scarce input,namely the agent's effort. In such a case, a differential in the degreeof observability of performance on individual tasks leads to a misallo-cation of effort across tasks. Holmstr6m and Milgrom then suggest

1 Assume that effort ej for cause i costs the agent Kejand yields a probability offinding evidence in favor of cause i equal to (p ei), with (p' > 0 > (p", (p 0) = 0, andp'(0) = 0 (thus (p(ej) corresponds to x cq in our binary effort model). Assumethat we want to implement eA = eB = e > 0. With two agents, the advocate for causei should receive wo = wj = 0, and wi = w should be set so as to havee = argmax (p ei) [1 (p (e) ]w- eK,

ejso p'(e)II1 - p(e)]w = K, or w = K/{p'(e) [1 - p(e)]1. An advocate's rent,p (e) / Ip'(e)] K - eK, is positive. With a single agent, we want

(e, e) = argmax (p ei)[1 -(p (e) ] w + (p e) -(p (ei)] w + [1- (ei)ej, ej

- p(ej) + 2p (ei) ( (e) ] wo - (ei + ej)K.As before, setting wo = 0 is optimal, and so is setting wi = Wj= w. The first-ordercondition with respect to ejimplies

(p'(ei) [ -2p (e) ]w = Kor

K(p'(e) [1 -2(p (e)]

So rents are higher with a single agent (and p(e) < 1/2 is a necessary condition forthe implementability of (e, e)).


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ADVOCATES 15specializing agents in groups of tasks that are similar in terms ofobservability of performance. In this paper, we assume away any ef-fort substitution problems and introduce instead a direct conflictbetween tasks, since only aggregateperformance is observable and isnonmonotonicin the effort expended on each task.Note that we have built our model so as to have a clean test ofthe impact of indirect rewards on the organizational form. Indeed,the organization would be indifferent between one and two agentsif information-based rewards could be specified. It would then suf-fice to promise agents K/ x per piece of evidence.We summarize this section in the following proposition.

PROPOSITION 1. Optimalityof advocacyunder nonmanipulable informa-tion.-Having two advocates strictly dominates having a single (non-partisan) one: (a) (i) If xc 1/2,there exists no incentive scheme thatinduces full information collection by a single information collector.(ii) If x < 1/2, here exists such an incentive scheme, which abandonsrent 2 xK/ (1 - 2 x) to the agent. (b) By contrast, for any value ofx, an advocacy system generates full information collection withoutabandoning rents to the agents.Remark.-Under nonmanipulability of information, the singleagent is reluctant to exert a second effort to find evidence favorableto cause B because he is afraid that this new evidence might annihi-late the benefit he will derive if he finds evidence favorable to causeA. One may object that, if the agent can conceal evidence, he willdo so if he finds evidence favorable to the two conflicting causes.He will keep one piece of evidence and throw away the other. It isinteresting in this respect to note that, when there is a single agentand when x ' 1/2, the principal obtains more effort by letting theagent have property rights on his information, that is, by allowinghim not to disclose evidence he has collected.'6 See Section IV fora broader analysis of manipulation.B. Robustness to CareerConcernsAppendix B tests the robustness of proposition 1 to the presence ofcareer concerns. To generate career concerns, we must both intro-duce uncertainty about the agents' ability and assume that futureemployment opportunities depend on updated beliefs about thisability. Suppose that the agents' probability of unveiling evidencefavorable to a cause and of being able to properly convey this infor-mation to the decision maker depends not only on their effort but

16 If WA 2 WB and (x - x2) (WB- wo) 2 K, the agent will want to exert the secondeffort if he has the right to conceal the information.


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i6 JOURNAL OF POLITICAL ECONOMYalso on their unknown talent as measured by q (or equivalently x)and that a labor market (internal or external, or else voters if agentsare politicians) infers from the decision information about theagents' talent and uses this information to update its beliefs. As inthe case of monetary rewards, the agents' payoffs are contingent onthe decision. The main insights carry over to the presence of careerconcerns.There is a new feature under career concerns, besides the stan-dard one that it is harder for the organization to control the agents'rewards. (This new feature stems from the uncertainty about theagents' abilities per se and would exist in the static, explicit rewardmodel of Sec. IIIA as well.) While full information collection by asingle agent remains infeasible if the (average) probability of dis-covering information is high, having a single agent for small (aver-age) probabilities of discovery may dominate an advocacy system be-cause of a new and interesting effect, namely a form of insuranceagainst extremism. Under uncertainty about the agents' talents, anadvocacy system may confront a talented agent and an untalentedone, resulting in a high probability of moving away from an optimalstatus quo because the untalented agent fails to defend his case prop-erly whereas the talented one succeeds. Using the same agent forboth tasks reduces the probability of extremism. By contrast, usingone or two agents has no effect on the probability of inertia (which,recall, arises when it is optimal to favor one cause but no evidenceis collected in favor of that cause).Let E[ ] denote the expectation operator with respect to the priorprobability distribution of the probability x of finding informationwhen one is diligent (induced by the prior probability distributionof talent q = x/ac). Appendix B then proves the following result.PROPOSITION 1'. Nonmanipulable information and careerconcerns.-Under career concerns the following properties are true: (a) Fullinformation collection by a single agent is infeasible if E[x( 1 - 2x)]< 0, whereas it is feasible under advocates if career concerns aresufficiently strong (i.e., when the agents' discount factor is highenough). (b) If E[x(I - 2x)] > 0 and career concerns are strongenough, full information collection is feasible with one or twoagents. The nonpartisan system dominates the advocacy system be-cause it yields a lower risk of extremism and the same risk of inertia.Let us return for the rest of the paper to the case of explicit incen-tives.IV. Manipulation of InformationWe now turn to a more general discussion of the costs and benefitsof competition in information creation. The general argument de-


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ADVOCATES 17veloped in this section is that advocacy induces agents to manipulateevidence that disserves their cause. While the organization shouldbe happy to let agents embrace a cause "up to a point" or "subjectto certain rules of the game" (indeed they often specify so), they donot always have the required information to check that the advocatescomply with the rules of the game, that is, do not engage in unduemanipulation of contrary evidence.A. Concealmentof InformationLet us extend the model of Section IIIA by assuming that in theprocess of searching for evidence favorable to cause i, an agent hassome probability of finding a "counterargument" or "contrary evi-dence" on top of the favorable evidence: The ministry of the envi-ronment may find that pollution is costly to curb, the ministry ofenergy may find that nuclear power will be expensive, and so forth.Assume further that the agent can hide (destroy) the contrary evi-dence. As we shall see, the advocate has no incentive to release thissort of information, whereas a more impartial agent would havesome such incentive.

Specifically, when exerting effort to search for information rela-tive to cause i, an agent has probability 1 - z of learning nothing.With probability zP, he learns, as before, one favorable piece of infor-mation, Pi, so that IOil= 1. And with probability z(I - j3), he learnstwo conflicting pieces of information: Pi and Ni. In this last case, thecounterargument Ni perfectly offsets (nullifies) the "argument" Piin that learning two conflicting signals is informationally equivalentto learning nothing. We thus summarize (Pi, Ni) as pi, which is thusequivalent to 0 for the purpose of updating beliefs if there is nomanipulation of information. In contrast, learning Pi means that Nidoes not exist, so that IOil= 1 for sure. (Counterargument Ni is onepossible formalization of contrary information. It should be clearthat this specification is chosen so as to simplify the analysis andhas no impact on the insights.) In the notation of Section III, theprobability of finding truly favorable information is x = ccq = zP.The posterior belief that IOil= 1 when learning 0 (no information)or learning Hi = (Pi, Ni) is equal to & = (cc - zP) / (1 - zP) < Xc.

We now assume that information can be concealed; that is, agentscan decide whether or not to report the Pi's and Ni's to the decisionmaker. Concealment thus consists in either announcing 0 ("I havelearned nothing") when having information or revealing only Piwhen one in fact has the counterargument Ni as well. In this world,efficient effort and full disclosure are incompatible: For an agent toreveal both good and bad news about a cause (Pi and Ni), he mustobtain the same reward as when he announces 0 or Pi, and so he is


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i8 JOURNAL OF POLITICAL ECONOMYbetter off exerting no effort. Inducing search effort for both causesis, however, feasible when using one or two agents.Finally, we make an assumption that will guarantee that an advo-cate has an influence on decision making. Because an advocate forcause i conceals information Ni not favorable to cause i, the decisionmaker may find that the disclosure of Pi is not informative enoughto justify embracing cause i even when there is no favorable informa-tion concerning cause j. That is, the manipulation of informationmay render the advocate noncredible (for more on the issue of cred-ibility, see subsection B). To avoid this and given that, conditionallyon disclosure of Pi by an advocate of cause i, there is a probability,1 that the agent has indeed observed 10il= 1 and a probability 1 -13 hat his beliefs are actually &, we make the following assumption.

AsSUMPTION 3. ELI > (1 - P)LE.The formal analysis of this extended model is straightforward andis performed in Dewatripont and Tirole (1997). Here are the maininsights. First, the possibility of concealing information makes it al-ways feasible to induce full information collection by a single agent,although at the cost of leaving him a rent. Errors in decision makingdue to the manipulation of information by the single agent alwaystake the form of extremism, as one would expect when the agent isnot rewarded for arguing in favor of the status quo. Thus the singleagent is an activist.Second, with two agents, full information collection does not re-quire leaving rents (again as in proposition 1). Because full disclo-sure is incompatible with information collection, each agent will dis-close either favorable information (Pi) only or the two conflictingpieces of evidence (Pi, Ni) only. The former case is the case of advo-cates, who conceal evidence contrary to their cause. The second caseis labeled "prosecution" because the release of (Pi, Ni) then leadsto a lower posterior probability that IOil= 1 than the announcementof no learning (0), which may indeed correspond to no learningbut may also reflect the existence of concealed favorable informa-tion. The case of prosecution is very related to advocacy, with eachagent in charge of destroying, rather than supporting, a cause.Whether the agents become advocates or prosecutors depends, ofcourse, on the incentives they receive. Advocates and prosecutorsgenerate both extremism and inertia. For instance, under advocacy,inertia occurs when there is favorable information about cause i andcontrary evidence about cause j. Advocate j then conceals the con-trary evidence, and the decision maker receives favorable evidencein favor of both causes and selects the status quo.By computing the losses in organizational welfare under the threepossible regimes (one nonpartisan or activist agent, two advocates,


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ADVOCATES 19and two prosecutors), we can show that the loss differentials due tothe manipulation of information by the agents are

Advocacy - nonpartisanship [2z2 13(1 -13)] L- [Z2(1 - f)2]L (3)_ XZL ~E- (3)- 2Z 12LE - zand

Ladvocacy- prosecution= [213z(2z- - 1)]LIP (4)Our conclusions can then be summarized in the following proposi-tion.

PROPOSITION 2. Information concealment: ossibleorganizations.-Un-der information concealment, three possible organizations mayemerge. (a) A single agent is a nonpartisan activist, and errors takethe form of extremism. (b) Advocates defend a cause and concealevidence contrary to it. They generate both inertia and extremism.(c) Prosecutors look for evidence contrary to a cause and concealevidence favorable to it. They too generate both inertia and extrem-ism. (d) The status quo is more likely to prevail under either advo-cacy or prosecution than under nonpartisanship.

PROPOSITION 3. Information concealment:comparative tatics.- (a) Asingle nonpartisan agent is optimal if, ceteris paribus, LI is largeenough relative to LE and K. (b) Bilateral advocacy is optimal if,ceteris paribus, 13 1. (c) Bilateral prosecution is optimal if, ceterisparibus, z -- 1.As mentioned above, bilateral advocacy and prosecution generateboth inertia and extremism, whereas a single activist generates onlyextremism. The latter is optimal if the relative cost of inertia is highenough, as stressed in case a of proposition 3. Cases b and c concerninstead instances in which bilateral advocacy and prosecution, re-spectively, tend to achieve full revelation of information, becausethere are in essence only two possible signals (Pi and 0, and Pi and


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20 JOURNAL OF POLITICAL ECONOMY1986; Shavell 1994; Shin 1994). Of particular interest is the recentpaper by Shin (1998), who investigates whether a principal/judgefacing two competing parties with vested interests may benefit fromdelegating them information collection. Shin treats the informationcollection process as exogenous in order to focus solely on incentivesto disclose the collected evidence. The cost of delegation comesfrom concealment of information, due to (exogenous) partisan pref-erences. The assumed benefit is that, on average, two observationsabout the truth are collected instead of one. Indeed, Shin assumesthat each party is, on average, as well informed as the principal.When the principal suspects that, in a particular case, one party hasvery good information, he can "allocate her the burden of proof"and thereby suffer little from potential concealment. Shin shows thatthis leads to the optimality of delegation in this setup. He also makesconnections with comparative legal systems, as we do in Section VI.One issue Shin abstracts from is the fact that more informationcollection under bilateral advocacy can have a cost. In our paper, theamount of information collection is the same under all organizationstructures. In a paper that builds on our model, Palumbo (1997)shows that duplication of efforts can, however, be attractive whentwo agents are hired, to induce them to "keep one another incheck." This argument can rationalize the desirability of enhancedinformation collection under bilateral advocacy.Remark.-We have assumed all along that moral hazard in infor-mation acquisition made it necessary to provide powerful incentiveschemes for the agent (s), leading to advocacy, prosecution, or activ-ism. These incentive schemes induce concealment as well as acquisi-tion. If information collection is easy, it makes sense to reduce thepower of incentive schemes so as to eliminate the agents' aversiontoward the status quo and to induce truthful release of existing infor-mation. For example, if, in the absence of effort, an agent acquiresinformation relative to a cause with probability only slightly lowerthan that when he exerts effort, then a flat scheme w0 = WA = WBfor a single agent avoids concealment without reducing informationacquisition much. We pursue the general theme of the desirabilityof low-powered incentives for truthful revelation of information inthe next subsection.B. Self-Advocacyversus RepresentativeAdvocacyUntil now we have assumed that the agents and the constituenciesare separate entities. In several instances, though, the constituenciesface a choice between pleading their own cause (self-advocacy) andhiring agents to represent them (delegated or representative advo-


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ADVOCATES 21cacy). Or, perhaps, the principal may have a preference for one formof advocacy over the other. What are the costs and benefits of eachalternative? The benefit of self-advocacy is clear: agents must be pro-vided with incentives. Representative advocacy in general introducesan agency cost."7We argue that there are two related forces against self-advocacy.Both are driven by the idea that the powerful incentives of self-advo-cates may induce them to misbehave, for example by overstatingtheir case or forging information, and may hurt the principal orbackfire on the constituency. First, the principal may distrust self-advocates and require or encourage the use of milder advocates (ac-countants, consulting firms, independent lobbyists, or sellers facinglow commission rates) who will provide more reliable information.Second, the constituencies may prefer to hire a representative them-selves even if they are not pressured to do so by the principal. In-deed, self-advocacy may amount to the lack of advocacy if it lackscredibility, and therefore the constituency may prefer to be repre-sented by a mild advocate rather than have little impact on the deci-sion process."These points are illustrated most simply by focusing on a singlecause, cause A. Suppose, for example, that the search in the direc-tion of cause B has been unsuccessful, so that the posterior beliefthat OB = +1 is equal to a. The information collected about causeA has three possible values (the following probabilities are condi-tional on the exertion of effort): 0, PA, and PA,with probabilities 1- z, z(1 - f), and zj3, respectively. Information PA is informationfavorable to cause A and should lead to the choice of A (given thatthere is no information about cause B). Information 0 and PAbothamount to a lack of information about cause A and therefore shouldlead to the status quo. However, in state PA the agent can forge theinformation and, at private cost f transform it into information PA.Information h, in contrast, is not forgeable. Information j (i.e., anunforgeable lack of information) is received with probability onewhen no effort is exerted. Thus the information technology is thesame as in subsection A, except for a cost of concealing contrary

17 There are two ways of introducing an agency cost in our model. The first is toassume that the constituency is, a priori, more knowledgeable than a prospectiveagent and therefore has a cost of acquiring information and preparing the caselower than K. The second and more standard one is to assume that the agents arerisk averse so that they are paid more than K on average. To avoid adding notation,we keep assuming that agents are risk neutral, and we assume that the constituency'scost of acquiring information is the same as an agent's.

18 This idea can be contrasted with the point made, e.g., in the bargaining litera-ture that it may be advantageous to delegate decision making to an agent who istougher (e.g., more patient) than oneself.


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22 JOURNAL OF POLITICAL ECONOMYevidence. Forging costfis the private cost incurred to "detach" fromOA =(PA, NA) contrary information NA n order to be able to discloseonly favorable evidence PA. We assume that forging cannot be de-tected by the decision maker (although it can be anticipated). LetG denote the gain accruing to constituency A when cause A is fa-vored over the status quo.'9 We assume that G > f, so forging canbe attractive to a self-advocate. We further require that (z3)f > K.We distinguish between two cases, depending on whether assump-tion 3 holds.a) Forging does not alter much the reliability of information:ALI > (1 - P)LE. That is, the principal chooses to favor cause Awhen receiving signal PA even though she is aware that the agentforges information whenever he has the opportunity to do so. In thiscase, the constituency bears no cost of self-advocacy. The principal,however, incurs a loss as a result of the forging of information. Theprincipal is then better off requiring that the constituency hire anadvocate with reward structure {WA,wo = 01, where WA< f, in orderto avoid forging.20 That is, the principal demands a low-powered in-centive scheme for the information collector, and such an incentivescheme is inconsistent with self-advocacy. The stakes are just toohigh.The logic behind this reasoning is highly reminiscent of the litera-tures on influence costs (Milgrom 1988) and multitask agency the-ory (Holmstr6m and Milgrom 1991). The similarity with the workon influence costs is that the agent may have excessive incentives toconvince the principal to pick a decision favorable to him. The anal-ogy with the multitask literature is that the agent may do poorly onone task (here, "not forging information") when given powerfulincentives on another (here, "convince the principal to embrace hiscause"). The novelty of our analysis, besides the specificity of theapplication, is the use of delegation as a device to reduce the powerof incentives in an influence cost context.b) Forging makes the self-advocate noncredible: 13LI (1 - P)LE.In this case, the principal prefers picking the status quo even whenthe self-advocate brings information PA,as long as the self-advocateforges information whenever feasible. It is clear that the equilibrium

19For simplicity we assume that G is state-independent. For example, G mightbe the deterministic private benefit enjoyed by a division manager when receivinga large investment budget and the state of nature would refer to the profitabil-ity of this investment (G is then independent of the state of nature if the man-ager has flat monetary incentives). Our analysis can obviously be generalized tostate-dependent G's. Note also that G may be included in LE, LI, and LM.20 Note that f may, moreover, be higher for some representative advocates if itincludes, e.g., the loss of reputation for independence in case of detection.


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ADVOCATES 23is then in mixed strategies. The self-advocate forges with probabilitywhen having information , and the principal favors cause A withprobability v when receiving information PA. Equilibrium conditionsare

(1 - f) YLE= PLIand

vG= f.The self-advocate's payoff is then equal to, for example, the one heobtains by not forging, namely z3v G = zpf. The self-advocate suffersfrom a lack of credibility. Indeed the self-advocate almost never suc-ceeds in pushing his cause when the cost of forging is small. (Notethat he will want to collect information as zip > K by assumption.)Suppose now that the constituency publicly hires an agent andpays him WA= K/ z4 if cause A is favored (and cannot later raisethe power of the incentive scheme through a secret deal). BecauseWA< f, this agent does not forge information. He is credible andprovides the constituency with an expected payoff equal to

z13(G -WA) = zIG - K> zpvG - K.The constituency is therefore strictly better off being represented.PROPOSITION 5. Optimality of delegated advocacy.-Ignore anyagency cost of delegation to a representing agent. Then (a) whenforging does not alter much the reliability of information ([LI >[1 - I]LE), the principal wants to impose delegated advocacy;(b) when forging substantially alters the reliability of information

(ELI < [1 -] LE), both the principal and the constituency are bet-ter off under delegated advocacy.V. Integrity of Decision Making: Advocacy andEndogenous AppealsWe have maintained the assumption that the decision maker picksthe decision that is optimal for the principal/ organization. This as-sumption is natural when the decision maker is also the principal.One may question the validity of the assumption when the decisionmaker is herself an agent for the principal. In effect there is a con-cern that judges, arbitrators, prime ministers, headquarters, and soforth may not perform their adjudication role properly because ofcapture, political agendas, or mere incompetency. This sectionmakes the following points in this respect (the first two are obvious):(1) Appeals are an efficient way to keep potentially biased decisionmakers on their toes. (2) Endogenous appeals (triggered by the par-


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ADVOCATES 25This last point can be related to the literature on disclosure andin particular to the result due to Milgrom and Roberts (1986), ac-cording to which an organization can costlessly obtain disclosure of

several pieces of information as long as for each piece of informationat least one party has an interest in disclosing the piece. In our frame-work, appeals are similar to disclosure of the information that deci-sion making was improper. We argue that it is useful to create biasedagents who have an interest in challenging decisions that go too farin the direction opposite to their bias.23PROPOSITION 6. Advocacygeneratesefficient appeal.-Any bias in thedecision maker's choice is appealed in an advocacy system, provided

that the advocate for cause i faces reward wi > wo > wj (i = 1, 2,j ? i). By contrast, a biased choice embracing one of the two causesis not appealed in a single-agent system.The conclusion we obtain here is, we think, very relevant, but toostark, since frivolous appeals are common in advocacy systems. Weleave the study of foundations of frivolous appeals for future re-search.

VI. ApplicationsA. ComparativeLegal SystemsThe issues in this paper have been discussed by comparative law ex-perts (see, e.g., Zweigert and K6tz 1987; Luban 1988). Indeed, onedifference between common-law (or Anglo-Saxon) countries andcivil-law (or Roman-Germanic) countries concerns trial procedures.Experts tend to speak, respectively, of "partisan" and "inquisito-rial" procedures. Common-law countries, especially the UnitedStates, put substantial weight on advocates relative to judges, proce-dures being particularly influenced by the paradigm of jury trials.Judges tend to be relatively passive and, for example, leave it to theadvocates (and, in criminal cases, the prosecution) to choose theirown expert witnesses. Lawyers, on the other hand, "should repre-sent a client zealously within the bounds of the law" (American BarAssociation Code). In practice, this means, for example, rehearsingwitnesses to make sure that they say what is in the client's interest.This kind of procedure is considered unethical in civil-law countries,where advocates' first duty is to help justice, and thus judges. The

23We maintain the assumption that the agents' rewards are based solely on deci-sions, and we thus rule out rewards for successful appeals. In Dewatripont and Tirole(1997), we discuss several reasons why such rewards might be difficult to implementin practice: strategic concealment of information in order to receive such rewards,low responsiveness to monetary incentives (but strong career concerns), and thepsychological cost of breaking private deals.


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26 JOURNAL OF POLITICAL ECONOMYsystem is called "inquisitorial" in that judges have a lot of freedomto direct the debates by asking questions and also by being the oneswho choose expert witnesses.A number of experts have defended the partisan system as thebest way to get at the truth: Zweigert and Kotz (1987, p. 282) quoteLord Eldon, a famous lord chancellor in the United Kingdom, assaying in 1822 that "truth is best discovered by powerful statementson both sides of the question." Particularly interesting is the Ameri-can Bar Association's official justification of the adversary system:

Any arbiter who attempts to decide a dispute without theaid of partisan advocacy . .. must undertake, not only therole of judge, but that of representative for both of the liti-gants. Each of these roles must be played to the full withoutbeing muted by qualifications derived from the others.When he is developing for each side the most effectivestatement of its case, the arbiter must put aside his neutral-ity and permit himself to be moved by a sympathetic identi-fication sufficiently intense to draw from his mind all thatit is capable of giving-in analysis, patience and creativepower. When he resumes his neutral position, he must beable to view with distrust the fruits of this identification andbe ready to reject the products of his own best mental ef-forts. The difficulties of this undertaking are obvious. If itis true that a man in his time must play many parts, it isscarcely given to him to play them all at once. [Fuller andRandall 1958, p. 1160]

On the other hand, a number of experts deplore the excesses ofthe partisan system in terms of unethical behavior by lawyers (e.g.,Frankel 1975, 1980; Luban 1988). Some others defend it while stress-ing that advocates have "a moral obligation to go along with thetestimony of perjurious clients and to discredit-brutally if neces-sary-opposing witnesses known to be telling the truth," as Luban(1988, p. xxi) summarizes Freedman's (1966, 1975) famous work oncriminal defense lawyers. While some writers would definitely notgo as far as Freedman, it is nonetheless clear that lawyers are at timesprevented from telling the truth to the court by the right of the-parties not to testify against themselves and by the confidentiality ofthe lawyer-client relationship. In turn, this confidentiality is seen asa precondition for the transfer of information from the client to thelawyer. The ethical problem has been recognized, and some proce-dures are there to limit it: cross-examination of witnesses, advancenotice of potential witnesses, and pretrial interrogation of the otherside's witnesses, to take some examples.


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ADVOCATES 27In contrast with the common-law system, the civil-law system hasbeen defended for its greater impartiality. Kaplan, von Mehren, andSchaefer (1958) argue that in Germany and neighboring countries

in continental Europe, procedural law is based on the idea that itis easier to get at the truth if the judge is given a stronger role andis entitled to question, inform, encourage, and advise the parties,lawyers, and witnesses so as to get a true and complete picture fromthem: "He is constantly descending to the level of the litigants, as anexaminer, patient or hectoring, as counselor and adviser, as insistentpromoter of settlements. Withal he has not entirely lost his characteras a civil servant-though of a special type-in a government depart-ment" (p. 1472). While the civil-law system can be advocated forfear of abuses of partisanship, it has been noticed that it can itselfbe subject to abuse by judges:24

The fact that in Germany the judges, not the parties,choose expert witnesses is similarly two-edged. It does pre-vent one of the most unseemly and disgraceful spectaclesin American adjudication, the combat of extravagantlycompensated, carefully coached, uncompromisingly parti-san experts. But since the German judge usually appointsonly one expert and relies on her testimony, any biases inthe judge's selection process or the expert's views will bedisastrous for the luckless party. Thus the system requiresa great deal of trust in the integrity of both judges and ex-perts. [Luban 1988, p. 100]

These comparative legal perspectives highlight the relevance of anumber of insights derived in our paper. First, and most important,the quote by Fuller and Randall, which represents the American BarAssociation's defense of the "partisan" system, fits well with ouranalysis, since it stresses the difficulties in strongly pursuing bothcauses at the same time.Second, it is also clear that concealment and even forging are verymuch on the mind of observers of the partisan system. Authors suchas Freedman even argue that partisanship necessarily implies con-cealment and forging; he thus finds it inconceivable to have the ad-vantages of partisanship without these disadvantages. While his inter-pretation is a bit controversial, concealment can clearly result fromthe confidentiality of the lawyer-client relationship, itselfjustified bythe need to develop a transparent relation between them. This lastelement is not present in the analysis above and would be an interest-

24 This concern is not totally absent in the common-law system: Judges have repu-tations, and lawyers play strategies at times to get "favorable" judges.


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28 JOURNAL OF POLITICAL ECONOMYing avenue for further research building on our study of representa-tive advocacy.Finally, the "inquisitorial" system is a nonpartisan, one-agent sys-tem, where the decision maker also plays the role of the agent, orhas it played by "independent" expert witnesses, as opposed to com-peting partisan expert witnesses chosen by each party. That thejudge plays the role of the agent is made clear by the quote of Kaplanet al. Still, one could not call him an activist since no financial incen-tives are given to him to pursue specific causes. One can even arguethat, in the civil-law system, his role is less one of a "lawmaker" andmore one of a "faithful abider" than in the common-law system.He is supposed to be driven by a "reputation for fairness," with pos-sibly some probability of bias. As the quote by Luban stresses, authorshave been aware that the inquisitorial system, relying on a singleagent/ decision maker (the judge), is more prone to abuse whenthe decision maker is biased than the partisan system.B. Political Science: The Role of CongressionalCommitteesOur work can shed some light on the debate among political scien-tists on the formation of committees in the U.S. Congress. We candistinguish here between the "distributive" approach pioneered byShepsle (1978) and the "informational" approach summarized inKrehbiel (1990, 1991) (see also Gilligan and Krehbiel 1989, 1990).The distributive approach offers a positive view of committees as acoordination device designed to allow all congressional representa-tives to implement programs that will please their geographic con-stituencies while being paid by the taxpayer at large. According tothis view, committees end up being staffed by "homogeneous highdemanders" (who will thus recommend some inefficient, or "porkbarrel," programs) and are granted agenda-setting power in orderto get their way. "Gains from trade" are obtained by all membersof Congress since they all sit on a number of committees where theycan exert their biases.25The informational approach challenges this view by stressing therole of committees as providers of expertise. Congress at large is-forced to delegate policy proposals in each area to a smaller subsetof its members simply because of time constraints. The role of thecommittee is to inform Congress about objective facts about various

25Why Congress in the aggregate finds it profitable to fund pork barrel programscan be rationalized by "political benefits" or "tax illusion" (see Shepsle and Wein-gast 1981).


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ADVOCATES 29policies and then to make recommendations. Theoretical work inthis area relies on signaling models. When receiving the recommen-dation signal, Congress takes into consideration the political compo-sition of the committee and chooses a policy according to its ownpolitical preferences. Here, the committee should ideally not getagenda-setting power26 and should be as trustworthy as possible forCongress, that is, be as close as possible to its median voter. Theprediction of the theory is that committees should not be composedof "homogeneous high demanders," but of "homogeneous moder-ates." The median voter in Congress would want committee mem-bers' preferences to be as aligned with hers as is consistent with theavailable workload of members of Congress.The empirical evidence does not fully discriminate between thetwo theories. For example, most members of the agricultural com-mittees are from rural states, and most members of the judiciarycommittees have law-related degrees. On the other hand, Krehbielshows that almost all committees (the only exception is the ArmedServices Committee) are heterogeneous in terms of rankings com-piled by various policy groups (e.g., Americans for Democratic Ac-tion for general rankings, or more policy-specific rankings).

Our own approach differs from Shepsle's in that we are primarilyconcerned with the design of efficient political processes. Yet, ourapproach is consistent with Shepsle's observations if one views thecommittee system as a system of advocacy across committees. Thebudgetary process is then best depicted as an incentive system inwhich each committee is expected to make the case for a specificset of expenditures (education, defense, etc.).27Conceptually, our approach is closer in spirit to the informationalapproach, which also takes an efficiency-based and information-based perspective. However, we offer a rationalization of heteroge-neous committees whereas the informational approach does not:there, a heterogeneous committee is better than a homogeneouslybiased committee (which will end up being less informative), but,as we observed, the ideal would be a committee composed only ofmembers of Congress with the same preferences as Congress's me-dian voter. In our theory, instead, there is positive value to heteroge-neity within a committee, in that competing advocates can generatemore information than a representative middle-of-the-roader, aslong as the decision space has more dimensions (left-right, geo-

26 One exception to this principle concerns the case in which the committee canbe motivated to acquire expertise only by the assurance that it will not be system-atically overruled by Congress (on this see Sec. VII).27 We thank Ken Shepsle for suggesting this interpretation.


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30 JOURNAL OF POLITICAL ECONOMYgraphic distribution, etc.) than just the arbitrage between broadbudgetary items (education, defense, etc.). Further, the advocacyapproach predicts, and indeed we observe, dissent and minority re-ports by members of committees. Relatedly, the prevalence of repre-sentative committees is prima facie evidence of the benefits of anadvocacy system. (Why the majority internalizes this efficiency con-cern and does not nominate only its own members to committeesmust be traced to the existence of a repeated game and reputationalconcerns.)Our approach can thus offer a "reconciliation" between theShepsle and Krehbiel approaches by interpreting the committee sys-tem as an advocacy arrangement in which legislators for whom farmsubsidies are salient advocate those policies through the AgricultureCommittee, those with defense plants in their districts push for largedefense appropriations, and so forth. In this interpretation, biasedcommittees become a way to generate information through compet-ing advocates in order to determine an efficient allocation of theglobalfederal budget. The advocacy approach is also consistent withKrehbiel's informational view and may help explain the dimensionof political heterogeneity within committees.C. Economic Illustration:Energy RegulationOur model belongs to a more general class of incentive problems.At an abstract level this class of incentive problems can be describedas follows. A principal cares about effort in two directions, X and Y.The principal's objective function U(X, Y) is increasing in both Xand Y.On the other hand, the agent(s) can be given incentives basedonly on a contractible or observable variable m whose cumulativedistribution F(ml X, Y) is (in the sense of first-order stochastic domi-nance) increasing in Xand decreasing in y.28Such problems are notwell behaved. In particular, the standard monotone likelihood ratioproperty (or its generalization) is not satisfied. For example, if theprincipal cares about total effort (U(X, Y) = X + Y), the likelihoodratio is not monotonic in the performance measure. We conjecturethat there is a strong tendency toward task separation in this classof agency problems.

Nonstandard agency problems of this sort are actually common.They include all decision problems in which one must evaluate thepros and cons of policies. But there exist applications that do notfit the paradigm of a decision maker relying on information col-28 In our model, m E {A, 0, B}, and X (respectively, Y) is the effort exerted to findevidence favorable to cause A (B).


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ADVOCATES 31lected by an agent. Consider "demand-side management" in elec-tricity regulation. A number of U.S. power companies are instructedto educate consumers on how to reduce their electricity consump-tion. At the same time, they also are meant to supply a high quality ofservice. Sales (m) depend negatively on demand-side managementeffort (X) and positively on service (Y). Some economists (see inparticularJoskow [1990]) have argued that it is difficult to structurethe public utility's incentives in such situations and that it would bemore efficient to allocate the demand-side management to a conser-vation advocate while putting the public utility in charge of increas-ing sales, a conclusion much in line with the philosophy of this pa-per. Another often-discussed example of conflicting task assignmentis the allocation of prevention and cleanup of banks to a single regu-latory agency. Such an agency may not want to engage in offsettingefforts of prevention and cleanup if it is politically accountable and ifthe voters observe only the number of banks caught violating capitaladequacy requirements.From a theoretical point of view, note that this formulation doesnot require any assumption about noncontractibility: If mis the onlyvariable observed by the principal, it is obviously the sole basis forcontracting. Investigating the generality of the structure we justsketched is an interesting avenue for research.VII. Topics for Future Theoretical ResearchSeveral promising lines of research would help obtain a more com-plete picture of the role of advocacy in organizations.

A. Separation of Investigation and AdjudicationWe have taken the line that information collectors should not be"judge and party" and that independent decision making, first, ismore efficient than decision making run by information collectorsand, second, provides a more accurate measure of their perfor-mance. Yet the role of some advocates or nonpartisans is not entirelyconfined to the provision of information and the defense of a cause.That is, information collectors may have some influence on decisionmaking beyond the informational impact. Committees in Congressinfluence decisions not only through their recommendations butalso through their agenda-setting powers. Relatedly, the union andthe management constrain an arbitrator's choice in a final offer arbi-tration. These departures from the principle of the separation ofinvestigation and adjudication suggest interesting directions for re-search. One may, for example, wonder whether the participation in


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32 JOURNAL OF POLITICAL ECONOMYdecision making might not be an (inefficient) substitute for missingincentives to collect information.The potential gain from transferring some decision rights to aninformation collector is that it enhances his incentives to acquireinformation.29 In our explicit incentive model, advocates in particu-lar never have insufficient incentives to acquire information (indeedSec. IVB has emphasized that advocates may have excessively strongoverall incentives). The separation of investigation and adjudicationis optimal. By contrast, if information collectors have insufficient in-centives to collect information (because of risk aversion or the non-contractibility of the decision, as in the career concerns model ofSec. IIIB), it may become optimal to depart from the separation ofinvestigation and adjudication.B. Competitionand Cooperationamong AdvocatesOur model depicts an elementary arbitrage between twocauses. Con-sequently, an advocate has a simple strategy: promote everythingthat is favorable to his cause and criticize anything that benefits therival cause. Some decisions involve a more complex choice amongn causes. Furthermore, advocates may have or develop "localizedexpertise," namely expertise that is useful to assess their own causeand related competing causes but is of little help to examine verydifferentiated alternatives. In such situations, advocates may com-pete mildly with each other, with a view to treating rival causes withrespect. Such concerns may well result in overprovision of positiveinformation and underprovision of negative information. Consider,for instance, ajob opening for a tenured position in a department.Those defending the appointment of researcher A in field X realizethat providing negative information about competing researcher Bin the same field raises the probability that A will be offered the jobbut also lowers the overall probability that someone in field X willbe chosen. Similar observations could be made for primaries in pres-idential or district representative elections.C. Combining Partisanship and NonpartisanshipWe have limited the number of agents by invoking costs of duplicat-ing the collection of information. This led us to a choice between

29 See Aghion and Tirole (1997) for a description of the mutual interdependencebetween decision rights and information structures. An alternative explanation forthe transfer of some decision rights to an information collector might be the desireto reduce the dimensionality of the information the decision maker must processbefore being able to reach a decision.


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ADVOCATES 33partisanship and nonpartisanship. Because both approaches are im-perfect, organizations have sometimes combined them at the costof duplication. For example, a CEO, president, prime minister, headof an antitrust authority, and so forth all have their own headquar-ters or staff, which are meant to form an independent and nonparti-san counterpower to the advocates (divisions, ministries, plaintiffand defendant, etc.). We conjecture that these nonpartisan officialsoften receive direct rewards in that their promotions and other re-wards are provided by the decision maker herself. (This does notmean that the headquarters and staff can be entirely relied on assources of information. Indeed, we have argued that advocates playan important role in generating information for decision making. )30So we observe combinations of direct and indirect rewards, as wellas of partisans and nonpartisans. Some of the distinctions betweenthe executive and legislative branches could be analyzed in this light,for example, in order to understand the respective roles of represen-tatives and prefects in providing the central government with infor-mation about their jurisdiction.VIII. SummaryThe main contribution of the paper has been to provide a rationalefor advocacy. After observing that many organizations (corporations,judiciary, and the executive and legislative branches of government)use competition among advocates of special interests to improve pol-icy making, it has argued that advocacy has two major benefits. First,the advocates' rewards closely track their performance whereas non-partisans' incentives are impaired by their pursuing several causesat one time. Second, advocacy enhances the integrity of decisionmaking by creating strong incentives to appeal when there is an abu-sive decision.We have pointed out that the use of biased agents also has costs.It creates a different pattern of manipulation of information. It isinteresting that the status quo is more likely to prevail under advo-cacy than with a nonpartisan: While advocates often neutralize eachother, a nonpartisan is eager to move policy away from the statusquo. Using multiple agents also creates a new bias in decision mak-ing by opposing agents with possibly different talents.We have also observed that self-advocates, that is, parties pleadingtheir own cause, are likely to overstate their case. The organization,concerned by the resulting loss in information, or the self-advocate

30On problems that may arise with nonpartisan advisors, see Coleman's (1990,pp. 387-89) discussion of sycophancy and "yes-men."


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34 JOURNAL OF POLITICAL ECONOMYhimself, fearing a lack of credibility, may hire or impose hiring of arepresentative advocate with less powerful incentives.On balance, we feel that nonpartisanship is more likely to be opti-mal if the following two conditions are satisfied: (a) either rewards(compensation or promotion) are provided by the decision makerherself and she can build a reputation for "fairness," so that infor-mation-based rewards are feasible, or inertia (which, recall, is morelikely under advocacy) is very costly; and (b) the decision maker'sgoals can be made sufficiently congruent with the organization's(i.e., either the decision maker is the principal or the decision mak-er's honesty or explicit and implicit incentives align her interestswith those of the principal), and thus the integrity of decision mak-ing is not a key issue. These conditions seem unlikely to hold inpolitics and law, which may explain why advocacy is paramount.Finally, the preliminary applications to comparative legal systemsand to the organization of Congress, as well as the list of open topicsdrawn in the previous section, suggest that further research on advo-cacy should be fruitful.

Appendix AFoundations of Decision-Based RewardsSuppose that the decision maker must decipher the information collectedby the agent(s).31 Suppose further that the decision maker (a) differs fromthe principal and (b) does not respond to monetary incentives (is veryriskaverse). The only determinant of the decision maker'sbehavior is then ca-reer concerns. The decision maker is "bright"with a high probabilityand"dumb" with a low probability,where "bright" refers to the decision mak-er's capacityto understand the meaning of the pieces of evidence collectedby the agent(s) (i.e., to find the "deciphering key" described in n. 31).Thus the decision maker is driven by the desire to demonstrate intelligenceand makes the decision that is best for the principal given the evidence.On the other hand, there is no mechanism that distinguishes between thetwo situations in which there are zero and two pieces of evidence, since thedistinction between the twois payoff-irrelevantonce the pieces of evidence

31Suppose that for each cause i there exists a latent realization of a random vari-able in [0, 1]. With probability 1 - c, this latent variable (i is equal to zero (nocase); with probability o, vie is drawn from the uniform distribution on (0, 1] (thereexists a case for cause i). An agent always draws a signal 5i in (0, 1]. If he exertseffort and there exists a case for cause i, he draws 5i = vie with probability q. In allother states of nature he draws 5i from the uniform distribution on (0, 1] (so 5iand vie coincide with probabilit

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