Accountability and learning with motivated agents
| Author | Tinghua Yu |
| DOI | 10.1177/09516298211061157 |
| Published date | 01 April 2022 |
| Date | 01 April 2022 |
| Subject Matter | Articles |
Accountability and learning
with motivated agents
Tinghua Yu
Department of Economics, Mathematics and Statistics, Birkbeck,
University of London.
Abstract
Should accountability be introduced to organizations that are learning about the right policies to
achieve their goals? I develop an agency model focusing on the interactions between accountability
and an agent’s intrinsic motivation. More effort by the agent leads to more informative policy out-
comes and thereby better policy learning. Holding the agent accountable for the policy outcomes
motivates the agent and thus improves policy learning. However, by removing the agent from
office upon policy failure and thereby taking away his benefit from learning through failure,
accountability also discourages the agent. This negative effect is more substantial when the intrinsic
motivation is higher. The principal, therefore, refrains from using accountability on the agent who
is more intrinsically motivated.
Keywords
Accountability, intrinsic motivation, policy learning
Should a wartime president sack a general who implements an initial strategy but fails to
achieve its strategic goals? The conventional wisdom is that accountability serves as an
external motivation for better performance, and the president should hold the general
accountable. Certainly, the general’s implementation of the initial strategy affects the
immediate outcome. Yet, in war, the engaging parties often need to learn the right strategy
to achieve their goals. Failure of the initial strategy generates valuable information for
learning and it is more informative if the general does not slack in implementing the
initial strategy. If the general would be sacked upon the failure, the general might be dis-
couraged to work in the beginning because he would not be able to use the knowledge
gained from learning through failure to achieve the final success. Accountability, in this
case, could backfire.
Corresponding author:
Tinghua Yu, Department of Economics, Mathematics and Statistics, Birkbeck, University of London.
Email:t.yu@bbk.ac.uk
Article
Journal of Theoretical Politics
2022, Vol. 34(2) 313–329
© The Author(s) 2022
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/ 09516298211061157
journals.sagepub.com/home/jtp
In the early years of the US civil war, President Lincoln considered whether to sack
General George B. McClellan who was making little progress in fighting the war.
Eventually, Lincoln held McClellan accountable and dismissed him from his position.
McClellan was believed to suffer from a lack of personal motivation. Many organizations
face the same question that a wartime president encounters. For example, many govern-
ment agencies are learning the right policies to govern effectively. Bureaucrats in these
agencies implement policies, and the agencies learn through the policy outcomes.
Unlike General McClellan, most bureaucrats in developed countries enjoy strong protec-
tions from job dismissal. Theory and empirics suggest that bureaucrats are often intrin-
sically motivated to carry out the task (Besley and Ghatak 2006; Brehm and Gates
1999; Prendergast 2008).
Should an agent implementing policies be held accountable when an organization
learns the right policy to achieve its goals? Does accountability crowd in or crowd out
intrinsic motivation? The literature has explored how contingent reward (extrinsic motiv-
ation) interacting with intrinsic motivation affects effort, but most studies do not examine
settings where experimenting and learning are involved.
1
Among the few exceptions,
Gailmard and Patty (2007) argue that job tenure is crucial in inducing intrinsically moti-
vated bureaucrats to make initial investments in policy expertise. Their theory applies to
policymakers but not to agents who are implementing policies. This paper aims to fill the
gap in the literature and address these questions.
This paper develops a formal model to analyze a principal’s decision of whether to
introduce accountability on an agent who implements the policy decision when an organ-
ization learns the right policy to achieve its goal. The principal (she) cares about achiev-
ing the organizational goal. When in office, the agent (he) is intrinsically motivated to
achieve the organizational goal and he also receives an additional perk that comes with
office. There exists two alternatives. Ex ante they are equally likely to be the right
policy. The right policy is more likely to achieve the organizational goal if the agent
works harder. The wrong policy always fails. The two-period game begins with the prin-
cipal’s decision of whether to hold the agent accountable for the outcome of the initial
policy. The agent sets a level of effort in implementing the initial policy. At the end of
the first period, the policy outcome is revealed to all players. According to the account-
ability rule, the principal retains an agent in office or replaces him with a new agent who
shares the preference in achieving the organizational goal with the sitting agent. Learning
from implementation of the initial policy, the principal decides the policy for the second
period. An agent in office decides how much effort to expend in implementing the
second-period policy.
A building block of the model is that the effort expended by the agent on the initial
policy contributes to learning. Failure of the initial policy could be caused either by
lack of effort or by implementing the wrong policy. Initial effort improves learning
through two mechanisms. First, more initial effort lowers the chance of switching to
the wrong policy when the initial policy is, in fact, correct. Second, as the initial effort
increases, a failure becomes more informative.
To improve learning, the principal chooses the accountability rule that induces more
effort from the agent. Accountability motivates the agent to perform well to stay in office.
However, it also discourages the agent. Given accountability, the agent will not remain in
314 Journal of Theoretical Politics 34(2)
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