Regulation As Delegation
65 Pages Posted: 28 Feb 2015 Last revised: 6 Jun 2015
Date Written: February 25, 2015
Abstract
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.
Keywords: regulation, principal-agent theory, behavioral economics, delegation
JEL Classification: D003, D10, D11, D18, D60, D80, K0, K2, D02, D14, D72, D73, D78, G28, H11, H41, I18
Suggested Citation: Suggested Citation