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- Title
Contracts offered by bureaucrats.
- Authors
Khalil, Fahad; Kim, Doyoung; Lawarrée, Jacques
- Abstract
We examine the power of incentives in bureaucracies by studying contracts offered by a bureaucrat to her agent. The bureaucrat operates under a fixed budget, optimally chosen by a funding authority, and she can engage in policy drift, which we define as inversely related to her intrinsic motivation. Interaction between a fixed budget and policy drift results in low-powered incentives. We discuss how the bureaucrat may benefit from stricter accountability as it leads to larger budgets. Low-powered incentives remain even in an alternative centralized setting, where the funding authority contracts directly with the agent using the bureaucrat to monitor output.
- Subjects
BUREAUCRACY; REWARDS programs (Criminal investigation); BUDGET; GRANTS (Money); SOCIAL responsibility of business; CONTRACTS &; economics; MANAGEMENT
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2013, Vol 44, Issue 4, p686
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/1756-2171.12037