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

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  • Gailmard, Sean

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.

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  • Gailmard, Sean, 2009. "Discretion Rather than Rules: Choice of Instruments to Control Bureaucratic Policy Making," Political Analysis, Cambridge University Press, vol. 17(1), pages 25-44, January.
    • Handle: RePEc:cup:polals:v:17:y:2009:i:01:p:25-44_00
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    Cited by:

    1. Joshua A Strayhorn & Clifford J Carrubba & Micheal W Giles, 2016. "Time constraints and the opportunity costs of oversight," Journal of Theoretical Politics, , vol. 28(3), pages 431-460, July.
    2. Naseer, Shaheen & Heine, Klaus, 2017. "Bureaucratic Identity and the Shape of Public Policy: A Game Theoretic Analysis," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168144, Verein für Socialpolitik / German Economic Association.
    3. Tapas Kundu & Tore Nilssen, 2022. "Delegating pollution permits," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(2), pages 457-487, April.
    4. Marco Sorge, 2015. "Lobbying (strategically appointed) bureaucrats," Constitutional Political Economy, Springer, vol. 26(2), pages 171-189, June.
    5. Ian R Turner, 2017. "Working smart and hard? Agency effort, judicial review, and policy precision," Journal of Theoretical Politics, , vol. 29(1), pages 69-96, January.
    6. Girard, Alexandre & Gnabo, Jean-Yves & Londoño van Rutten, Rodrigo, 2023. "Firm performance and the crowd effect in lobbying competition," Finance Research Letters, Elsevier, vol. 53(C).
    7. Turner, Ian R, 2021. "Reviewing Procedure vs. Judging Substance: How Increasing Bureaucratic Oversight Can Reduce Bureaucratic Accountability," SocArXiv v6kzw, Center for Open Science.
    8. Ioannis N. Grigoriadis & Theocharis N. Grigoriadis, 2018. "The political economy of Kulturkampf: evidence from imperial Prussia and republican Turkey," Constitutional Political Economy, Springer, vol. 29(3), pages 339-369, September.
    9. Peter Grajzl, 2011. "A property rights approach to legislative delegation," Economics of Governance, Springer, vol. 12(2), pages 177-200, June.

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