DOI: 10.21202/1993-047X.10.2016.1.97-123

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Regulation as delegation

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Objective: to consider the conception of reverse delegation, when the government acts a principal and an individual – an agent, from the point of view of behavioral Principal-Agent Theory.

Methods: statistical, method, sociological polling.

Results: In diverse areas – from retirement savings, to consumer credit, to prescription drug use, to fuel economy and energy efficiency rules, to tobacco consumption, to food and beverage consumption – government makes decisions for us or endeavors to help us make better decisions, thus serving as our agent. From the point of view of Principal-Agent Theory and behavioral Principal-Agent Theory, a great deal of modern regulation can be helpfully evaluated as a hypothetical delegation. Shifting from personal decisions to public goods problems, the authors view the idea of reverse delegation, with the government as principal and the individuals as agents. They show that the essence of delegation changes depending on the context. The article describes conditions under which various approaches will make sense.

Scientific novelty: the paper is devoted to the foreign experience of regulation through delegation by the example of a country with developed market economy (the USA). It shows the prospects of such approach in solving both the public and the private tasks. Application of Principal-Agent Theory and behavioral Principal-Agent Theory is viewed to distinguish between such types of hypothetical delegation as information, default rules, incentives, precommitments, mandates, and prohibitions. The article considers the benefits and costs of delegation, and circumstances in which one or another approach makes sense.

Practical significance: Principal-Agent Theory is widely used in economics and political science, and can serve as a convenient tool to consider the optimal scale and essence of the assistance rendered to us by the government as our agent. The paper is of interest for the Russian legal science, as the institution of delegation as a legal phenomenon has been weakly studied in Russia.
 

Keywords :

Civil law; Behavioral Principal-Agent Theory; Principal-Agent Theory; Regulation; Delegation

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Original publication: https://academic.oup.com/jla/article/7/1/1/891422
 

Citation :

Russian version: Bar-Gill O., Sunstein C. R. Regulation as delegation, Actual Problems of Economics and  Law, 2016, No. 1, pp. 97–123.

Type of article : The scientific article

Date of receipt of the article :
02.02.2016

Date of adoption of the print :
28.02.2016

Date of online accommodation :
15.04.2016