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


  • Gailmard, Sean


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. Naseer, Shaheen & Heine, Klaus, 2017. "Bureaucratic Identity and the Shape of Public Policy: A Game Theoretic Analysis," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168144, Verein für Socialpolitik / German Economic Association.
    2. Marco Sorge, 2015. "Lobbying (strategically appointed) bureaucrats," Constitutional Political Economy, Springer, vol. 26(2), pages 171-189, June.
    3. 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.

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