Discretionary Authority and Prioritizing in Government Agencies

40 Pages Posted: 9 Dec 2014 Last revised: 18 Apr 2019

See all articles by Maarten Pieter Schinkel

Maarten Pieter Schinkel

University of Amsterdam - Department of Economics; Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Lukáš Tóth

University of Amsterdam - Amsterdam Center for Law & Economics (ACLE)

Jan Tuinstra

University of Amsterdam - Department of Quantitative Economics (KE); Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: February 2019

Abstract

Government agencies have a certain freedom to choose among different possible courses of action. This paper studies agency decision-making on priorities in a principal-agent framework with multi-tasking. Agency leadership has discretion over part of the agency's budget to incentivize staff in the pickup of cases. The head is concerned with society's benefits from the agency's overall performance, but also with the organization's public image. Based on their talent and the contracts offered by the head, staff officials choose which type of task to pursue: complex major cases with an uncertain outcome, or basic minor and simple cases with a much higher probability of success. We show how the size of the agency's discretionary budget influences both the scale and type of tasks it will engage in. Small changes in the budget can cause extensive restructuring from major to minor tasks, or vice versa, causing social welfare jumps. Agency behavior depends on the head's inclination, on which government may have imperfect information. Antitrust authorities serve as one illustration of implications for institutional design.

Keywords: Government agency, discretion, budget, enforcement priorities, antitrust

JEL Classification: D02, L44, M52

Suggested Citation

Schinkel, Maarten Pieter and Tóth, Lukáš and Tuinstra, Jan, Discretionary Authority and Prioritizing in Government Agencies (February 2019). Amsterdam Law School Research Paper No. 2014-65; Amsterdam Center for Law & Economics Working Paper No. 2014-06. Available at SSRN: https://ssrn.com/abstract=2533894 or http://dx.doi.org/10.2139/ssrn.2533894

Maarten Pieter Schinkel (Contact Author)

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
1018 WB Amsterdam
Netherlands
+31 20 525 7132 (Phone)
+31 20 525 5318 (Fax)

Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Lukáš Tóth

University of Amsterdam - Amsterdam Center for Law & Economics (ACLE) ( email )

Roetersstraat 11
Amsterdam, North Holland 1018 WB
Netherlands

Jan Tuinstra

University of Amsterdam - Department of Quantitative Economics (KE) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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