Multiple Principals and Oversight of Bureaucratic Policy-making

I examine a model in which multiple legislative principals monitor a bureaucratic agent’s implementation of a project. The principals can each perform oversight of the implementation to limit information asymmetries exploited by the agent. Oversight is costly to perform and due to information leakages between principals, oversight by one principal reveals information to all principals. Thus for some values of the audit costs, there is a collective action problem in monitoring among the principals: the multiplicity of principals can cause the level of this form of oversight to be underperformed relative to the principals’ joint interests. Notably, the multiplicity of principals reduces their collective control over the agent even though they have common interests about the agent’s actions, i.e. conflicting preference about agent actions are not necessary to attenuate accountability when there are multiple principals. Overall the results point out that the institutional structure of the overseeing body has an important effect on accountability, independent of the institutional structure of the overseen.