Knowing the Limits

Abstract

This chapter explains that to resolve the tension between formal commitments and informal flexibility, the member states have to find a way to determine whether formal rules apply or whether informal governance is pertinent. Member states delegate this decision to a trustworthy actor who elicits information about the actual demand for informal governance in each situation. This process is elaborated in several steps. First, the informal norm of discretion brings about a demand to cope with the problem of moral hazard. The second step discusses several solutions for the problem. The third step argues that commonly invoked solutions are ill suited for the problem. The fourth step contends that the adjudicatory authority must be delegated to the member government that is against the demand for informal governance. Taking this hypothesis in the context of the EU, the fifth step argues that the EU's Council presidency may wield adjudicatory authority.