Asymmetric Information, Delegation, and the Structure of Policy-Making

Abstract

Congress uses varying degrees of specificity when passing legislation. Sometimes it writes very detailed, exacting laws; other times it leaves these details to implementing agencies. A natural positive question then arises: what factors are critical for understanding the degree of delegation used by Congress in a particular circumstance? This paper exploits the tradeoff between the distributive and informational effects of organizational design to examine congressional delegation. We argue that variations in the relative preferences of committee, floor (congressional median voter), and executive actors cause a rational floor voter to choose different forms of collective decision making. We find that homogeneity of committee-floor preferences leads to less delegation, while preference homogeneity between Congress and the executive leads to more delegation. We also argue that delegation emerges when actors are more risk averse or when the uncertainty characterizing the collective choice environment is large. We develop our logic using a game theoretic model of the policy-making process and draw out the empirical implications of our approach.