Optimal Agency Bias and Regulatory Review

Bubb, Ryan; Warren, Patrick L.

doi:10.2139/ssrn.2201042

Cited by 12 publications

(19 citation statements)

References 26 publications

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“…But they focus on the effect of structure on the expertise of officeholders, not the effect on the motivation of the self-selecting agents. 35 Bubb and Warren (2013) highlight the interaction of shirking and policy bias among bureaucrats in administrative agencies. However, their focus is on agents shirking in the production of information.…”

Section: 3: Bundling and Separation Of Powersmentioning

confidence: 99%

“…Just as the police may have stronger preferences for punishment than the citizen-principal, an administrative agency in charge of, for example, employee welfare may have stronger preferences for the protection of employees than the citizen-principal. Thus, where Bubb & Warren (2013) imagine that the President selects a generalist administrative agency (OIRA) to monitor specialty agencies (EPA), we identify why generalist courts more commonly serve the function of reviewing the self-selected bureaucrats of specialty agencies.…”

Section: 3: Bundling and Separation Of Powersmentioning

confidence: 99%

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Punitive Police? Agency Costs, Law Enforcement, and Criminal Procedure

Dharmapala¹,

Garoupa²,

McAdams³

2016

The Journal of Legal Studies

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Criminal law enforcement depends on the actions of public agents such as police officers, but there is no standard economic model of police as public agents. We seek to remedy this deficiency by offering an agency model of police behavior. We begin by explaining why the standard contracting solutions are unlikely to work. Instead, we follow recent literature exploring intrinsic motivation and posit heterogeneity in the preferences of potential agents. Drawing on experimental evidence on punishment preferences (so-called "altruistic punishment"), in which subjects reveal a preference for punishing wrongdoers, our model identifies circumstances in which "punitive" individuals (with stronger-than-average punishment preferences) will self-select into law enforcement jobs that offer the opportunity to punish (or facilitate the punishment of) wrongdoers. Such "punitive" agents will accept a lower salary and be less likely to shirk, but create agency costs associated with their excessive zeal (relative to the public's preferences) in searching, seizing, and punishing suspects. Under plausible assumptions, the public chooses to hire punitive police agents, while submitting them to monitoring by other agents (such as the judiciary) with average punishment preferences. Thus, two kinds of agents are better than one. We explore various implications for police shirking, corruption, and the content of the criminal procedure rights that the judiciary enforces. Acknowledgments:We thank Alon Harel,

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Section: 3: Bundling and Separation Of Powersmentioning

confidence: 99%

Section: 3: Bundling and Separation Of Powersmentioning

confidence: 99%

Punitive Police? Agency Costs, Law Enforcement, and Criminal Procedure

Dharmapala¹,

Garoupa²,

McAdams³

2016

The Journal of Legal Studies

View full text Add to dashboard Cite

show abstract

“…A manager might choose an excessively risky project (or an excessively safe project), if relevant features of the project are unobservable to shareholders. And the Administrator of the EPA is more likely to take action -regulatory action or enforcement action -not in line with the President's policy preferences, if this action is unobservable to the President (Yellen 1984;Hermalin 1993;Bubb & Warren 2014). These risks are, in some sense, inherent to delegation.…”

Section: The Costs Of Delegationmentioning

confidence: 99%

Regulation As Delegation

Bar‐Gill¹,

Sunstein

2015

SSRN Journal

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In diverse areas -from retirement savings, to fuel economy, to prescription drugs, to consumer credit, to food and beverage consumption -government makes personal decisions for us or helps us make what it sees as better decisions. In other words, government serves as our agent. Understood in light of Principal-Agent Theory (PAT) and Behavioral Principal-Agent Theory (BPAT), a great deal of modern regulation can be helpfully evaluated as a hypothetical delegation. Shifting from personal decisions to public goods problems, we introduce the idea of reverse delegation, with the government as principal and the individuals as agents. 3In diverse areas -from retirement savings, to consumer credit, to prescription drug use, to fuel economy and energy efficiency rules, to tobacco consumption, to food and beverage consumption -government makes decisions for us or endeavors to help us make better decisions. In other words, government serves as our agent. Principal-Agent Theory (PAT), broadly applied in economics and political science, can serve as a useful framework for considering the optimal scope and nature of this assistance that our agent, the government, provides.It is quite common to talk about government as the agent of the People in a democratic society (Ackerman 1993 where government requires people to obtain a prescription before using certain medicines, or forbids workers from running certain risks in the workplace. The use of PAT helps to discipline discussions that might otherwise be far too abstract. Adding a behavioral lens, Behavioral PAT (BPAT) helpfully enriches the basic analysis,suggesting that boundedly rational principals will be prone to both insufficient and excessive delegation. 4One of our principal goals is to enlist PAT and BPAT to distinguish among several distinctive kinds of hypothetical delegations, involving information, default rules, incentives, precommitments, mandates, and prohibitions. Focusing on the benefits and costs of delegation, which depend on its type, we identify the circumstances in which one or another approach makes sense.In the domain of personal decisions, we argue, it is helpful to think about the individual as principal and the government as agent. A different set of regulatory problems -public goods problems -can be conceptualized as a reverse delegation, with the government as principal and the individuals as agents. Here the government-principal, as representative of the People, sets a public objective -a clean, sustainable environment, financial stability, higher educational attainment -and enlists individuals-agents to help attain this objective. 5Our central argument is that the idea of regulation-as-delegation provides a useful frame for the evaluation and design of regulation. It brings to the fore personal decisions as a central object of regulation. It offers a unified model for studying disparate regulatory tools that are usually considered in isolation, highlighting important interactions between them. It captures both hypothetical and actual judgm...

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“…In the cases above of Gary Gensler and the SEC commissioners who imposed the latest restrictions on money market funds, the relevant industries needed to engage in influence in the rulemaking process rather than simply relying on the appointments process for likeminded leaders. Beyond these examples, other studies of agency heads have identified past leaders with positions further from industry than the president who appointed them, and thereby possibly biased against industry: various chairmen of the Federal Trade Commission of the 1970s 291 and administrators of the EPA, including William Ruckelshaus,…”

Section: Harnessing Via Selection: Executive Appointmentsmentioning

confidence: 99%

“…294 On a larger scale, Paul Quirk's classic study on industry influence in regulation finds that substantially more appointees had "anti-industry" viewpoints than "pro-industry" and "moderate" viewpoints combined. 295 Quirk concludes that the notion that industry successfully influences executive appointments is "emphatically not substantiat-ed.…”

mentioning

confidence: 99%

Harnessing Industry Influence

Tai

2015

SSRN Journal

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Optimal Agency Bias and Regulatory Review

Cited by 12 publications

References 26 publications

Punitive Police? Agency Costs, Law Enforcement, and Criminal Procedure

Punitive Police? Agency Costs, Law Enforcement, and Criminal Procedure

Regulation As Delegation

Harnessing Industry Influence

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