4. Citizens and public officials 1.31

Citizens and public officials
Basic structure of delegation Principal Needs to "hire" someone to do a task (for lack of time, need of expertise) Offers a "contract" (compensation in exchange for completion of task) Agent Decides whether to sign the "contract" Decides amount of "effort" to put into task
No bargaining Agent cannot propose an alternative contract Credible commitment Compensation is given if task is completed Conflict between actors "Agent's objectives are in conflict with those of the principal" Asymmetric information Problems that arise if one actor knows something the other does not
Page1of 36
Uploaded by JusticePuppyMaster6746 on coursehero.com