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The Right to Know: Transparency for an Open World resources

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voluntary, in the sense of being left completely to the discretion of the disclosers. In some cases, governments require corporations or individuals to release information, and in others, intergovernmental or nongovernmental organizations apply pressures that are not le- gally binding but are nonetheless powerful. Yet those requirements and pressures still leave substantial freedom of action to those who must decide whether, and to what degree, to comply. And the holders of information often face incentives to keep information secret. Broadly speaking, transparency is valuable be- cause it contributes to overcoming what social scientists call agency problems. In all governance situations, principals (such as citizens or shareholders) delegate responsibility to agents (such as a govern- ment or a corporate board) to make decisions on their behalf. Prob- lems arise because the principals are never able to perfectly monitor their agents: they know less about the situation the agents face and the actions they take than the agents themselves do. So the agents may make misguided or self-serving decisions against the interests of their unknowing, unseeing bosses. Why do these information asymmetries occur? To some extent, they are the unavoidable outgrowth of a useful division of labor. Insiders such as government officials and corporate managers are more informed than outsiders because the outsiders have delegated management to them. Outsiders delegate responsibility in this way partly because it is costly to become informed and make decisions. (The other reason is that deliberating and making decisions is more efficient with a smaller group.) If gathering and processing the infor- mation required to make decisions were a simple matter, then there would be less need for such representative governing institutions as corporate boards and parliaments. Principals cannot acquire the full range of information available to their agents without negating the efficiency advantage of having agents. But this division of labor creates opportunities that agents/in- siders can readily exploit by withholding so much information that accountability becomes difficult. Officials have strong motives for keeping others ignorant of their behavior. One is that secrecy pro- vides some insulation against being accused of making a mistake. It is much easier for an official to deflect criticism if important infor- mation about the situation the official faced, the decision that was made, and who made it remains secret. A second incentive is that  introduction: the battle over transparency

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