What Is Regulatory Capture

question 170

Multiple Choice

What is regulatory capture?

• A)It is a situation in which a policymaker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign.
• B)It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents.
• C)It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest.
• D)It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest.

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Definitions:

Eye Contact

A form of nonverbal communication that occurs when two individuals look directly at each other's eyes.

Status

The relative social, professional, or other standing of someone or something within a group or society.

Positive Bias

The tendency to process information in a way that favors positive outcomes or perspectives, sometimes at the expense of objectivity.

Filtering

The process of modifying information as it passes through various levels of an organization, often leading to distortions or omissions.