Bargaining, Transaction Costs, and Coalition Governance

Abstract

Representative democracies face two fundamental challenges, delegation and coalescence. Delegation is necessary because most citizens have neither the capacity nor the time to make many important political decisions on their own. To facilitate large-scale governance, delegation must occur. Citizens must find and select representatives whom they can trust to make public policy in accordance with particular principles. Elected representatives, in turn, must delegate to leaders of political parties or bureaucratic agencies to further the pursuit of policy goals. Heads of executive agencies have to delegate to their subordinates. While delegation makes large-scale representative democracy possible, it is not without risk. Problems of delegation need to be overcome. For with the power of the elective or appointive office also comes opportunities to act against the public interest.