IDEAS home Printed from https://ideas.repec.org/p/uab/wprdea/wpdea1606.html
   My bibliography  Save this paper

Behavioral Regulatory Agencies

Author

Listed:
  • Francesc Trillas Jané

    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Abstract

This article analyses how the commitment problem in regulation, and the potential for a strategic delegation solution, is affected by the consideration of bounded rationality by agents that participate in the regulatory interaction. Regulators and other agents have endogenous preferences. Non-optimizing behavior, expert biases (and related de-biasing strategies), and a concern for fairness and process also modify the traditional regulatory game. As a result, on the one hand independent regulators are seen as part of a potentially more robust regulatory system, and on the other hand their contribution to this system can be based on a wider range of instruments.

Suggested Citation

  • Francesc Trillas Jané, 2016. "Behavioral Regulatory Agencies," Working Papers wpdea1606, Department of Applied Economics at Universitat Autonoma of Barcelona.
  • Handle: RePEc:uab:wprdea:wpdea1606
    as

    Download full text from publisher

    File URL: https://ecap.uab.cat/RePEc/doc/wpdea1606.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gual Jordi & Trillas Francesc, 2006. "Telecommunications Policies: Measurement and Determinants," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-24, June.
    2. John J. García & Francesc Trillas, 2012. "Regulatory Reform and Corporate Control in European Energy Industries," Documentos de Trabajo CIEF 010664, Universidad EAFIT.
    3. Gohlmann, Silja & Vaubel, Roland, 2007. "The educational and occupational background of central bankers and its effect on inflation: An empirical analysis," European Economic Review, Elsevier, vol. 51(4), pages 925-941, May.
    4. Spiegler, Ran, 2014. "Bounded Rationality and Industrial Organization," OUP Catalogue, Oxford University Press, number 9780199334261.
    5. Edward L. Glaeser & Andrei Shleifer, 2003. "The Rise of the Regulatory State," Journal of Economic Literature, American Economic Association, vol. 41(2), pages 401-425, June.
    6. Tirole, Jean, 1994. "The Internal Organization of Government," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 1-29, January.
    7. Charles Goodhart & Dirk Schoenmaker & Paolo Dasgupta, 2002. "The Skill Profile of Central Bankers and Supervisors," Review of Finance, European Finance Association, vol. 6(3), pages 397-427.
    8. Charles W. Calomiris & Stephen H. Haber, 2015. "Fragile by Design: The Political Origins of Banking Crises and Scarce Credit," Economics Books, Princeton University Press, edition 1, number 10177-2, April.
    9. Kuehnhanss, Colin R. & Heyndels, Bruno & Hilken, Katharina, 2015. "Choice in politics: Equivalency framing in economic policy decisions and the influence of expertise," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 360-374.
    10. Neil Rickman & Robert Witt, 2008. "Favouritism and Financial Incentives: A Natural Experiment," Economica, London School of Economics and Political Science, vol. 75(298), pages 296-309, May.
    11. Belden, Susan, 1989. "Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 432-441, November.
    12. Paul L. Joskow, 1972. "The Determination of the Allowed Rate of Return in a Formal Regulatory Hearing," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 632-644, Autumn.
    13. Timothy Besley & Stephen Coate, 2003. "Elected Versus Appointed Regulators: Theory and Evidence," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1176-1206, September.
    14. Levy, Brian & Spiller, Pablo T, 1994. "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 201-246, October.
    15. Richard Podpiera & Mr. Martin Cihak, 2006. "Is One Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision," IMF Working Papers 2006/057, International Monetary Fund.
    16. Jean-Jacques Laffont & David Martimort, 1999. "Separation of Regulators Against Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 232-262, Summer.
    17. Mark Harris & Paul Levine & Christopher Spencer, 2011. "A decade of dissent: explaining the dissent voting behavior of Bank of England MPC members," Public Choice, Springer, vol. 146(3), pages 413-442, March.
    18. Farrell, Joseph & Weiser, Philip J., 2003. "Modularity, Vertical Integration, and Open Access Policies: Towards a Convergence of Antitrust and Regulation in the Internet Age," Department of Economics, Working Paper Series qt4dh7q2dd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    19. Michael D. Bordo & Pierre L. Siklos, 2017. "Central Bank Credibility before and after the Crisis," Open Economies Review, Springer, vol. 28(1), pages 19-45, February.
    20. Mark Armstrong & Steffen Huck, 2011. "Behavioral Economics as Applied to Firms: A Primer," Antitrust Chronicle, Competition Policy International, vol. 1.
    21. Martin Èihák & Richard Podpiera, 2006. "Is One Watchdog Better than Three? International Experience with Integrated Financial-Sector Supervision (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 56(3-4), pages 102-126, March.
    22. Currie, David & Levine, Paul L & Rickman, Neil, 1999. "Delegation and the Ratchet Effect: Should Regulators Be Pro-Industry?," CEPR Discussion Papers 2274, C.E.P.R. Discussion Papers.
    23. F. Naert, 2009. "Competition Authorities and Regulators in Belgium: Hierarchy versus Cooperation," Competition and Regulation in Network Industries, Intersentia, vol. 10(2), pages 139-159, June.
    24. Carlo Cambini & Laura Rondi, 2017. "Independent Agencies, Political Interference, And Firm Investment: Evidence From The European Union," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 281-304, January.
    25. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
    26. Canice Prendergast, 2007. "The Motivation and Bias of Bureaucrats," American Economic Review, American Economic Association, vol. 97(1), pages 180-196, March.
    27. Hallsworth, Michael & List, John A. & Metcalfe, Robert D. & Vlaev, Ivo, 2017. "The behavioralist as tax collector: Using natural field experiments to enhance tax compliance," Journal of Public Economics, Elsevier, vol. 148(C), pages 14-31.
    28. Castañeda, Gonzalo, 2011. "Alternative routes of political change: Elites fracture or social mobilization, economic incentives or cultural thresholds," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(2), pages 178-191, April.
    29. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, December.
    30. Joskow, Paul L, 1974. "Inflation and Environmental Concern: Structural Change in the Process of Public Utility Price Regulation," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 291-327, October.
    31. Berry,Christopher R., 2009. "Imperfect Union," Cambridge Books, Cambridge University Press, number 9780521764735.
    32. Francesc Trillas & Daniel Montolio & Néstor Duch, 2011. "Productive Efficiency And Regulatory Reform: The Case Of Vehicle Inspection Services," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 19(1), pages 33-59, Spring.
    33. Berry,Christopher R., 2009. "Imperfect Union," Cambridge Books, Cambridge University Press, number 9780521758352.
    34. Oliver E. Williamson, 1976. "Franchise Bidding for Natural Monopolies -- in General and with Respect to CATV," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 73-104, Spring.
    35. Evans, Joanne & Levine, Paul & Trillas, Francesc, 2008. "Lobbies, delegation and the under-investment problem in regulation," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 17-40, January.
    36. Ludivine Garside & Paul A. Grout & Anna Zalewska, 2013. "Does Experience Make You ‘Tougher’? Evidence From Competition Law," Economic Journal, Royal Economic Society, vol. 0, pages 474-490, May.
    37. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    38. Witold J. Henisz & Bennet A. Zelner, 2004. "Explicating political hazards and safeguards: a transaction cost politics approach," Industrial and Corporate Change, Oxford University Press, vol. 13(6), pages 901-915, December.
    39. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    40. F. Trillas & M.A. Montoya, 2011. "Commitment and Regulatory Independence in Practice in Latin American and Caribbean Countries," Competition and Regulation in Network Industries, Intersentia, vol. 12(1), pages 27-57, March.
    41. Trillas, Francesc & Staffiero, Gianandrea, 2007. "Regulatory reform, development and distributive concerns," IESE Research Papers D/665, IESE Business School.
    42. K. Basu, 1997. "On Misunderstanding Government: an Analysis of the Art of Policy Advice," Economics and Politics, Wiley Blackwell, vol. 9(3), pages 231-250, November.
    43. Avinash Dixit, 2002. "# Incentives and Organizations in the Public Sector: An Interpretative Review," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 696-727.
    44. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
    45. David Hirshleifer, 2008. "Psychological Bias as a Driver of Financial Regulation," European Financial Management, European Financial Management Association, vol. 14(5), pages 856-874, November.
    46. Glaeser, Edward L., 2006. "Paternalism and Psychology," Working Paper Series rwp06-006, Harvard University, John F. Kennedy School of Government.
    47. Francesc Trillas & Miguel Angel Montoya, 2008. "The degree of commitment to regulator independence: measurement and impact," Hacienda Pública Española / Review of Public Economics, IEF, vol. 185(2), pages 89-114, July.
    48. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics, and Organization, Oxford University Press, vol. 3(2), pages 243-277, Fall.
    49. James Cooper & William Kovacic, 2012. "Behavioral economics: implications for regulatory behavior," Journal of Regulatory Economics, Springer, vol. 41(1), pages 41-58, February.
    50. Trillas, Francesc, 2001. "The takeover of Enersis: the control of privatized utilities," Utilities Policy, Elsevier, vol. 10(1), pages 25-45, March.
    51. Bendor, Jonathan & Moe, Terry M., 1985. "An Adaptive Model of Bureaucratic Politics," American Political Science Review, Cambridge University Press, vol. 79(3), pages 755-774, September.
    52. Janice A. Hauge & Mark A. Jamison & James E. Prieger, 2012. "Oust the Louse: Does Political Pressure Discipline Regulators?," Journal of Industrial Economics, Wiley Blackwell, vol. 60(2), pages 299-332, June.
    53. Nicholas Stern, 2010. "Presidential Address Imperfections in the Economics of Public Policy, Imperfections in Markets, and Climate Change," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 253-288, 04-05.
    54. Trillas, Francesc, 2010. "Electricity and telecoms reforms in the EU: Insights from the economics of federalism," Utilities Policy, Elsevier, vol. 18(2), pages 66-76, June.
    55. Casey B. Mulligan & Andrei Shleifer, 2005. "The Extent of the Market and the Supply of Regulation," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1445-1473.
    56. James Cooper & William Kovacic, 2012. "Erratum to: Behavioral economics: implications for regulatory behavior," Journal of Regulatory Economics, Springer, vol. 41(2), pages 292-292, April.
    57. Cowen, Tyler & Glazer, Amihai & Zajc, Katarina, 2000. "Credibility may require discretion, not rules," Journal of Public Economics, Elsevier, vol. 76(2), pages 295-306, May.
    58. Masahiko Aoki & Geoffrey Rothwell, 2011. "Organizations under Large Uncertainty: An Analysis of the Fukushima Catastrophe," Discussion Papers 11-001, Stanford Institute for Economic Policy Research.
    59. Joaquim Silvestre, 2003. "Wicksell, Lindahl and the Theory of Public Goods," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(4), pages 527-553, December.
    60. Clare Leaver, 2009. "Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies," American Economic Review, American Economic Association, vol. 99(3), pages 572-607, June.
    61. John M. de Figueiredo & Edward H. Stiglitz, 2015. "Democratic Rulemaking," NBER Working Papers 21765, National Bureau of Economic Research, Inc.
    62. Victor P. Goldberg, 1976. "Regulation and Administered Contracts," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 426-448, Autumn.
    63. Paul Levine & John Stern & Francesc Trillas, 2005. "Utility price regulation and time inconsistency: comparisons with monetary policy," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 447-478, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Trillas, Francesc, 2013. "The Institutional Architecture of Regulation and Competition: Spains's 2012 Reform," IESE Research Papers D/1067, IESE Business School.
    2. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    3. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 27, pages 1557-1700, Elsevier.
    4. Joanne Evans & Paul Levine & Neil Rickman & Francesc Trillas, 2011. "Delegation to Independent Regulators and the Ratchet Effect," School of Economics Discussion Papers 0911, School of Economics, University of Surrey.
    5. Antonio Estache & Liam Wren-Lewis, 2009. "Toward a Theory of Regulation for Developing Countries: Following Jean-Jacques Laffont's Lead," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 729-770, September.
    6. Antonio Estache & Liam Wren-Lewis, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," Working Papers ECARES ECARES 2010-033, ULB -- Universite Libre de Bruxelles.
    7. Flavio Menezes & Magnus Söderberg & Miguel Santolino, 2012. "Regulatory behaviour under threat of court reversal," Discussion Papers Series 472, School of Economics, University of Queensland, Australia.
    8. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
    9. Trillas, Francesc, 2010. "Network industries and regulatory jurisdiction," IESE Research Papers D/859, IESE Business School.
    10. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    11. Spiller, Pablo T., 2013. "Transaction cost regulation," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 232-242.
    12. Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers 2008/8, Institut d'Economia de Barcelona (IEB).
    13. Fahad Khalil & Doyoung Kim & Jacques Lawarrée, 2013. "Contracts offered by bureaucrats," RAND Journal of Economics, RAND Corporation, vol. 44(4), pages 686-711, December.
    14. Mariano Tommasi & Pablo T. Spiller, 2004. "The Institutions of Regulation," Working Papers 67, Universidad de San Andres, Departamento de Economia, revised Mar 2004.
    15. Grajzl, Peter & Murrell, Peter, 2007. "Allocating lawmaking powers: Self-regulation vs government regulation," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 520-545, September.
    16. Guerriero, Carmine, 2011. "Accountability in government and regulatory policies: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 453-469.
    17. Antonio Estache & Liam Wren-Lewis, 2011. "Anti-Corruption Policy in Theories of Sector Regulation," Chapters, in: Susan Rose-Ackerman & Tina Søreide (ed.), International Handbook on the Economics of Corruption, Volume Two, chapter 9, Edward Elgar Publishing.
    18. Francesc Trillas, 2008. "Regulatory federalism in network industries," Working Papers 2008/8, Institut d'Economia de Barcelona (IEB).
    19. Evans, Joanne & Levine, Paul & Trillas, Francesc, 2008. "Lobbies, delegation and the under-investment problem in regulation," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 17-40, January.
    20. Jean‐Michel Glachant, 2008. "La Deregulation Des Industries De Reseaux Comme Politique Institutionnelle De Creation De Marches Et De Mecanismes De Gouvernance," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 79(3‐4), pages 487-525, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uab:wprdea:wpdea1606. 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: . General contact details of provider: https://edirc.repec.org/data/dauabes.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dept. Economia Aplicada (email available below). General contact details of provider: https://edirc.repec.org/data/dauabes.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.