Delegation and political turnover
| Date | 01 April 2020 |
| Author | Greg Sasso |
| Published date | 01 April 2020 |
| DOI | 10.1177/0951629819895596 |
| Subject Matter | Articles |
Article
Journal of Theoretical Politics
2020, Vol.32(2) 262–288
ÓThe Author(s) 2020
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DOI: 10.1177/0951629819895596
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Delegation and political
turnover
Greg Sasso
Universita
`Bocconi, Milan, Italy
Abstract
We study a two-period delegation model with an uncertain future principal. In the first period, an
incumbent principal decides whetherto delegate policy-making authority to an agent or make pol-
icy herself. Before the secondperiod, there is an election, and another principal with differentpre-
ferences may take power. The mainresult is that the incumbent can exploit the uncertainty about
the future principal to extract policy surplus from the agent. The agent’s uncertainty about the
future principal pushes him to implement a policy that both principals accept. The surplus from
this compromise policy makes the incumbent better off than she would be without the possibility
of turnover. We alsofind that when costs are low, policy stability can increaseas elections become
more competitive, as the agent has more incentive to implement a compromise policy. We then
allow the incumbent to appoint the agent. We show that as the incumbent becomes more likely
to retain office, she prefers more policy conflict with the agent.
Keywords
Principal-Agent; Delegation; Bureaucracy
1. Introduction
Consider two problems commonly faced by politicians while in office. First, they
try create policies intended to outlast their time in office. However, future politi-
cians may change or reverse policy once the previous office holder is out of power.
Political turnover, therefore, leads to policy instability and has negative conse-
quences for the politician.
Second, politicians must also sometimes delegate policy-making to other actors,
such as bureaucrats, states, or businesses. This creates the canonical principal–
Corresponding author:
Gregory Sasso, Universita
`Bocconi, Via Guglielmo
¨Ro
¨ntgen, 1, Milano, 20136,Italy.
Email: gregory.sasso@unibocconi.it
agent problem. The politician gives up some authority to the other actor to incenti-
vize the actor to work effectively. The agent, however, must believe that the princi-
pal will not revoke this authority in the future.
By analyzing the two problems together, however, we show that they are funda-
mentally connected. Delegation in the face of turnover can help solve the problem
of policy instability even when the agent does not expect the delegating politician to
remain in power in the future.
We see examples of principals and agents anticipating this possibility of turn-
over all the time. In 2014, Washington and Colorado became the first two states to
implement legalization of marijuana for recreational use. In effect, the federal gov-
ernment delegated marijuana policy to the states. The states could be certain they
would have a Democrat-controlled justice department for only 2 years however.
Therefore, they would have to either be prepared to have their policies possibly
overturned after the election or create policies that both parties would accept. Both
states touted the large increase in tax revenue they expected to receive from legaliz-
ing marijuana. By stressing the revenue creation, they were hoping to appeal to
people who were not proponents of drug legalization.
Government agencies can also anticipate possible turnover. They can try to
insulate their policies through procedural means, such as timing the promulgation
of a rule to when their allies are in power and holding it back if enemies are in
charge. Agencies can also frame issues in such a way to try and head off criticism
from actors predisposed to dislike the rule. For example, the US Food and Drug
Administration (FDA) specifically used ‘‘opponent-friendly assumptions’’ when
writing their menu-labeling rule to try and head off conservative opposition
(Potter, 2019).
Sometimes, policies are overturned anyway. For example, the Congressional
Review Act (CRA) allows Congress to pass legislation overturning recent agency-
promulgated rules. The 115th Congress successfully used the CRA to overturn 15
Obama-era agency rules, the most since the CRA became law. Rule overturns are
subject to presidential veto, and thus, agencies duringthe end of the Obama admin-
istration may have felt the probability of a unified Republican government was not
high enough to worry about when promulgating new rules. We want a theory of
delegation and turnover that can account for all of these situations.
We study the connection between delegation, political turnover, and policy sta-
bility with a model of two legislative principals and one agent. The agent could be
thought of as a state, a bureaucratic agency, or a private firm. Policies have two
components: a location and a quality.
In the first period, an incumbent legislator decides whether to delegate policy-
making authority to an agent or to retain authority for herself. If she retains
authority, the legislator chooses any policy location she wishes with a policy qual-
ity of zero. If she delegates authority, the agent chooses a policy location and a
policy quality.
Between the periods, there is an exogenous probability the incumbent legislator
will be replaced by a challenger. The first-period policy, both the location and qual-
ity, remains in place at the beginning of period two.
Sasso 263
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