Discretion Rather than Rules: Choice of Instruments to Control Bureaucratic Policy Making
Open Access
- 1 January 2009
- journal article
- Published by Cambridge University Press (CUP) in Political Analysis
- Vol. 17 (1), 25-44
- https://doi.org/10.1093/pan/mpn011
Abstract
In this paper I investigate the trade-off a legislature faces in the choice of instruments to ensure accountability by bureaucrats with private information. The legislature can either design a state-contingent incentive scheme or “menu law” to elicit the bureau's information or it can simply limit the set of choices open to the bureaucrat and let it choose as it wishes (an action restriction). I show that the optimal action restriction is simply a connected interval of the policy space. However, this class of instruments is not optimal without some sort of limitation on the set of levers of control available to the legislature. I then analyze one such limitation salient in politics, the legislative principal's inability to commit to honor a schedule of (state contingent) policy choices and transfer payments for a menu law. In this case the optimal action restriction outperforms (in terms of the legislature's welfare) the best available menu law.Keywords
This publication has 29 references indexed in Scilit:
- Authority and Communication in OrganizationsThe Review of Economic Studies, 2002
- Deliberate Discretion?Published by Cambridge University Press (CUP) ,2002
- Multiple Referrals and Multidimensional Cheap TalkEconometrica, 2002
- Legislative Organization with Informational CommitteesAmerican Journal of Political Science, 2000
- An informational perspective on administrative proceduresJournal of Law, Economics, and Organization, 1999
- Political Control Versus Expertise: Congressional Choices about Administrative ProceduresAmerican Political Science Review, 1995
- A Theory of Political Control and Agency DiscretionAmerican Journal of Political Science, 1989
- Politicians, Bureaucrats, and Asymmetric InformationAmerican Journal of Political Science, 1987
- Regulating a Monopolist with Unknown CostsEconometrica, 1982
- Outside Information and the Degree of Monopoly Power of a Public BureauSouthern Economic Journal, 1980