Does Clarifying Responsibility Always Improve Policy?

In the principal-agent relationship that characterizes the policy-making process, unified agency and observability of agent actions clarify responsibility for policy outcomes. We show that when policy making is sequential, these institutional features can interact with negative consequences for the welfare of political principals. In equilibrium, the principal behaves in a way that induces the agent to over-emphasize late stages of the policy-making process relative to early stages. Eliminating either unified agency or agent action observability eliminates these distortions, but at a cost in terms of the power of incentives and the level of rent seeking. Whether fully or partially clarifying responsibility is optimal depends on the magnitudes of these competing effects. Although eliminating both unified agency and agent action observability is never optimal, it is possible for no clarity of responsibility to dominate full clarity of responsibility. Thus, our model identifies are conditions under which the welfare implications of clarifying responsibility are the opposite of those suggested by conventional wisdom. Word Count (as per TeXShop): 7294 Accountability in any form of political representation hinges on the principals’ ability to tailor sanctions and rewards to choices made by their agents. That ability depends, in turn, on the principals’ access to a clear picture of those choices and their relationship to policy outcomes. The concept of clarity of responsibility, which has gained considerable influence in comparative political analysis of electoral agency, is an immediate outgrowth of this view (Lewis-Beck, 1988; Powell and Whitten, 1993; Powell, 2000). At the core of this concept is the ideal of a principal who can clearly identify the agents and actions responsible for particular outcomes. A principal’s ability to do so is affected by two key features of the institutional environment: whether control over policy is unified or divided among agents and whether the principal observes not only the outcome of an agent’s action (i.e., whether the policy succeeds), but also the action itself. Consolidating control in a single agent minimizes that agent’s ability to shift the blame for policy failures onto other agents and forces her to internalize the full incentive effect of any rewards or punishments created by the principal. Observing an agent’s effort, rather than merely the policy outcome, makes it possible for the principal to avoid rewarding an agent who exerted low effort but generated a good outcome due to good luck or punishing an agent who exerted high effort but generated a bad outcome due to bad luck. The literature on clarity of responsibility in electoral control has shed considerable light on the institutional underpinnings of accountability. Nonetheless, in our view, that literature can be fruitfully pushed in at least two directions. First, unified agency and action observability are both institutional features that unambiguously have to do with clarifying responsibility. Yet the literature on clarity of responsibility has treated them separately, primarily focusing on unified agency. We study the interaction of these two institutional methods for clarifying responsibility, uncovering their unexpected consequences for policy outcomes. Second, the force of the intuitive argument for clear responsibility improving accountability extends beyond settings of electoral control. Our model, while potentially applicable to the analysis of electoral agency, is designed to be broadly descriptive of accountability relationships between appropriately positioned actors across different institutional contexts of government. Given our general focus on clarifying responsibility, we break slightly from the dominant terminology of the existing literature. In particular, we use the term full clarity of responsibility