Delegation versus Communication in the Organization of Government
When a government creates an agency to gather information relevant to policymaking, it faces two critical organizational questions: whether the agency should be given authority to decide on policy or merely supply advice, and what should the policy goals of the agency be. Existing literature on the first question is unable to address the second, because the question of authority becomes moot if the government can simply replicate its preferences within the agency. In contrast, this paper examines both questions within a model of policymaking under time inconsistency, a setting in which the government has a well-known incentive to create an agency with preferences that differ from its own. Thus, our framework permits a meaningful analysis of delegation versus communication with an endogenously chosen agent. The first main finding of the paper is that the government can do equally well with a strategic choice of agent, from which it solicits advice, instead of delegating authority, as long as the time inconsistency problem is not too severe. The second main finding is that the government may strictly prefer seeking advice to delegating authority if there is prior uncertainty with respect to what is the optimal policy.
|Date of creation:||04 Jun 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Georgetown University Department of Economics Washington, DC 20057-1036|
Web page: http://econ.georgetown.edu/
|Order Information:|| Postal: Roger Lagunoff Professor of Economics Georgetown University Department of Economics Washington, DC 20057-1036|
Web: http://econ.georgetown.edu/ Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Philippe Aghion & Jean Tirole, 1994.
"Formal and Real Authority in Organizations,"
95-8, Massachusetts Institute of Technology (MIT), Department of Economics.
- Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Scholarly Articles 4554125, Harvard University Department of Economics.
- Philippe Aghion & Jean Tirole, 1994. "Normal and Real Authority in Organizations," Working papers 94-13, Massachusetts Institute of Technology (MIT), Department of Economics.
- Aghion, Philippe & Tirole, Jean, 1994. "Formal and Real Authority in Organizations," IDEI Working Papers 37, Institut d'Économie Industrielle (IDEI), Toulouse.
- Alberto Alesina & Guido Tabellini, 2005.
"Why do Politicians Delegate?,"
784828000000000470, UCLA Department of Economics.
- Alberto Alesina & Guido Tabellini, 2005. "Why do Politicians Delegate?," Harvard Institute of Economic Research Working Papers 2079, Harvard - Institute of Economic Research.
- Alberto Alesina & Guido Tabellini, 2005. "Why Do Politicians Delegate?," NBER Working Papers 11531, National Bureau of Economic Research, Inc.
- J. Kornai & E. Maskin & G. Roland., 2004.
"Understanding the Soft Budget Constraint,"
N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 11.
- J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
- János Kornai & Eric Maskin & Gérard Roland, 2003. "Understanding the Soft Budget Constraint," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1095-1136, December.
- Anders Olofsgârd, 2004. "Secessions and Political Extremism: Why Regional Referenda Do Not Solve the Problem," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 805-832, 09.
- Wouter Dessein, 2000.
"Authority and Communication in Organizations,"
Econometric Society World Congress 2000 Contributed Papers
1747, Econometric Society.
- Timothy Besley & Stephen Coate, 2001. "Lobbying and Welfare in a Representative Democracy," Review of Economic Studies, Oxford University Press, vol. 68(1), pages 67-82.
- Hao Li & Wing Suen, 2004. "Delegating Decisions to Experts," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S311-S335, February.
- Mathias Dewatripont & Philippe Aghion & Patrick Rey, 2004.
ULB Institutional Repository
2013/9647, ULB -- Universite Libre de Bruxelles.
- Charles Wyplosz, 2005. "Fiscal Policy: Institutions versus Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 191(1), pages 64-78, January.
- Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen.
When requesting a correction, please mention this item's handle: RePEc:geo:guwopa:gueconwpa~06-06-04. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marcia Suss)
If references are entirely missing, you can add them using this form.