Political Agency, Oversight, and Bias: The Instrumental Value of Politicized Policymaking
43 Pages Posted: 29 Aug 2013 Last revised: 16 Aug 2017
Date Written: February 8, 2017
We develop a theory of policymaking between a principal, an agent, and an overseer. The agent increases the overall quality of policy outcomes through costly capacity investments. Oversight impacts agent investment incentives, but only if the policy bias of the agent does as well. The principal chooses whether or not to authorize the agent to make policy on her behalf in light of oversight dynamics. We show that when oversight is not an effective means of political control, the principal never benefits from a biased agent relative to an ally. When oversight is effective, the principal almost always benefits from agent bias. Based on the dynamics of policymaking oversight the ally principle fails for instrumental reasons. The principal benefits from trading off agent bias for higher capacity investments. The results have implications for bureaucratic appointments and intra-agency organization.
Keywords: Policymaking; Bureaucracy; Oversight; Political agency problems; Formal theory
JEL Classification: D73, D82, H11
Suggested Citation: Suggested Citation