Regulation as delegation

Abstract

In diverse areas-from retirement savings, to fuel economy, to prescription drugs, to consumer credit, to food and beverage consumption-government makes personal decisions for us or helps us make what it sees as better decisions. In other words, government serves as our agent. Understood in light 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, we introduce the idea of reverse delegation, with the government as principal and the individuals as agents.