Public Decision-Making Processes and Asymmetry of Information

The problems arising from the existence of asymmetric information in public decision making have been widely explored by economists. Most of the traditional analysis of public sector activities has been reviewed to take accountofthe possible distortions arising from an asymmetric distribution of relevant information among the actors of the public decision-making process. A normative approach has been developed to design incentive schemes which tackle adverse selection and moral hazard problems within public organisations: our understanding of these problems is now much better, and some of the mechanisms designed have had important practical implications. While this analysis is still under way in many fields of public economics, as the papers by Jones and Zanola, and Trimarchi witness, a debate is ongoing on the possible theoretical limitations ofthis approach and on its actual relevance for public sector activities. This book encompasses different contributions to these issues, on both theoretical and practical areas, which were firstly presented at a conference in Catania. The innermost problem in the current discussion arises from the fact that this normative analysis is firmly rooted in the complete contracting framework, with the consequence that, despite the analytical complexities of most models, their results rely on very simplified assumptions. Most complexities of the organisation of public sector, and more generally, of writing "contracts", are therefore swept away.

Klappentext

The issue of asymmetric information and public decision-making has been widely explored by economists. Most of the traditional analysis of public sector activities has been reviewed to take account of the different incentive problems arising from an asymmetric distribution of relevant information among the actors of the public decision-making process. A normative approach has been developed, mainly employing the principal agent paradigm to design incentive schemes which tackle adverse selection and moral hazard problems within public organizations. Still, this analysis is under way in many fields of public economics. br/ However, a debate is ongoing on the theoretical limitations of this approach and on its relevance for the actual public sector activities. emPublic Decision-Making Processes and Asymmetry of Information/em encompasses different contributions to these issues, on both theoretical and practical areas. br/ The innermost problem in the current discussion arises from the fact that this normative analysis is firmly rooted in the complete contracting framework, with the consequence that, despite the analytical complexities of most models, their results rely on very simplified assumptions. Most complexities of the organization of public sector, and more generally, of writing "contracts", are therefore swept away. Once the need for an incomplete contracting approach is recognized, the question becomes how to relax some of the assumptions characterizing the complete contracting framework, without getting ad hoc results. The Introduction to this book, written by Jean Jacques Laffont, sets the general grid to interpret the position of its papers in this debate. br/ The four papers in Part 1 of the book are devoted to developing the analysis of some of the theoretical issues mentioned in the Introduction. Part 2 is devoted to discussing the applications of the theory to different public sector activities.

Inhalt
The Economics of Information and Public Policy.- 1 : Theory.- 1. Industrial Policy, Optimal Majorities and How These Can Prevent Capture.- 2. On the Role of Lobbies in Policy Making.- 3. Delegated Control of Incentives in Regulated Industries.- 4. Firms, Unions and Regulators.- 2 : Applications.- 5. Implementation Practices In Regulation: An Analysis of the UK Experience.- 6. Public Procurement In The EU.- 7. Agency and Health Care.- 8. Incentive Failure and the Market for Information Goods.