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Delegated Reform Decisions with Career Concerns

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  • Liqun Liu

Abstract

I analyze how a careerist delegate carries out reform decisions and implementation under alternative information environments. Regardless of his true policy preference, the delegate seeks retention and tries to signal to a principal that he shares an aligned policy predisposition. Given this pandering incentive, the principal best motivates the delegate's implementation if she can commit to a retention rule that is pivotal on reform outcomes. I characterize an "informativeness condition" under which this retention rule is endogenous, provided that the principal uses an opaque information policy: she observes the delegate's policy choice and outcomes, but not the effort. Under other information policies, the principal has to reward congruent policy choices rather than good policy outcomes; her policy interest is damaged by failing to sufficiently motivate reform implementation.

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  • Liqun Liu, 2020. "Delegated Reform Decisions with Career Concerns," Papers 2012.01331, arXiv.org, revised Jul 2021.
  • Handle: RePEc:arx:papers:2012.01331
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