Information, Regulatory Commitment and the Investment Dilemma
Abstract: Does more information lead to less investment? In the context of de-facto non-independence of regulation, civil society actors produce information and try to change voter strategy. Their aim is to bring about a regime change and hence a new regulatory set-up which will generate more favorable regulation. However, we show using a linked action situation approach through stylized games that in the short run, biased information produced by public interest groups and amplified by media actually tends to reduce regulatory commitment, irrespective of a regime change. This leads to a ‘low investment trap’. We give some indicative support to this claim through one instance of public monitoring of electricity in India. Finally, we argue that in the long-run this dilemma will be solved under a repeated game situation where state regulators make only public interest moves ‘knowing’ that a perennial investment trap would otherwise be created. However, this will be possible only under the condition that an institutional mechanism for information production exists.
