Discretion Rather than Rules: Choice of Instruments to Control Bureaucratic Policy Making

Posted: 18 Aug 2009

See all articles by Sean Gailmard

Sean Gailmard

University of California, Berkeley - Charles and Louise Travers Department of Political Science

Date Written: Winter 2009

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.

Suggested Citation

Gailmard, Sean, Discretion Rather than Rules: Choice of Instruments to Control Bureaucratic Policy Making (Winter 2009). Political Analysis, Vol. 17, Issue 1, pp. 25-44, 2009, Available at SSRN: https://ssrn.com/abstract=1448443 or http://dx.doi.org/10.1093/pan/mpn011

Sean Gailmard (Contact Author)

University of California, Berkeley - Charles and Louise Travers Department of Political Science ( email )

210 Barrows Hall
Berkeley, CA 94720
United States
510-642-4678 (Phone)

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