Standard models of hierarchy assume that agents and middle managers are better informed than principals about how to implement a particular task. We estimate the value of the informational advantage held by supervisors – middle managers – when ministerial leadership – the principal –...

Many developing countries have suffered under the personal rule of kleptocrats', who implement highly inefficient economic policies, expropriate the wealth of their citizens, and use the proceeds for their own glorification or consumption. We argue that the success of kleptocrats rests, in part,...

Bureaucratic performance standards are featured in many proposals to increase efficiency in government. These standards reward bureaucrats on the basis of measured outcomes. The performance standards system created under the Job Training Partnership Act (JTPA) of 1982 is often cited as a...

This paper examines the performance of the JTPA performance system, a widely emulated model for inducing efficiency in government organizations. We present a model of how performance incentives may distort bureaucratic decisions. We define cream skimming within the model. Two major empirical...

This paper investigates the relationship between the characteristics of medical licensing boards and the frequency with which boards discipline physicians. Specifically, we take advantage of variation in the structure of medical licensing boards between 1993 and 2003 to determine the effect of...

This paper discusses the fundamental underpinnings and some implications of transaction cost regulation (TCR), a framework to analyze the interaction between governments and investors fundamentally, but not exclusively, in utility industries. TCR sees regulation as the governance structure of...

I use variation in approval time for generic drugs to shed light on the objectives of the federal agency in charge of granting entry permission for these drugs (FDA). Applications belonging to firms later found to have engaged in fraud or corruption were approved nine months faster on average,...

Thanks to extraordinary and exponential improvements in data storage and computing capacities, it is now possible to collect, manage, and analyze data in magnitudes and in manners that would have been inconceivable just a short time ago. As the world has developed this remarkable capacity to...

We mailed letters to non-existent business addresses in 159 countries (10 per country), and measured whether they come back to the return address in the US and how long it takes. About 60% of the letters were returned, taking over 6 months, on average. The results provide new objective...

This paper collects and analyzes available information on administrative costs associated with public and private retirement systems. We explore expenses of the US social security system and compare these with data from national systems in other countries. We find that administration costs of...