Bureaucracy, Rational Choice Models

This entry discusses rational choice models of the bureaucracy. It first defines what it means for a theoretical model of the bureaucracy to employ rational choice and discusses two major applications of these models. It then discusses the basic assumptions underlying most models of the bureaucracy. Finally, it presents major themes and findings in the literature and discusses how these are related to modeling assumptions.

Rational choice models of the bureaucracy operate under the assumption that all relevant actors are rational. All players in the model—the government, bureaucrats, and private sector entities affected by bureaucratic decisions—have well-defined preference orderings over possible outcomes and act in a manner that ensures that their preferred outcomes are realized.

To facilitate analysis, scholars in this tradition typically assume that players' preferences satisfy several properties. It is generally assumed that players' preferences can be represented by a utility function, such that a player prefers outcome A to outcome B if and only if that player's utility from outcome A is greater than that from outcome B. It is often further assumed that players have consistent preferences regarding risk, so that preferences over uncertain outcomes may be represented by expected utilities. Many models further assume that players react to new information according to Bayes's rule (i.e., how one should change one's existing beliefs in light of new evidence).

Rational choice models of the bureaucracy tend to be game theoretic. All players are assumed to be strategic in their interactions—each player considers the strategies of all other players in attempting to reach his or her preferred outcome. Analysts derive equilibrium solutions to these models, where an equilibrium is defined as a set of strategies wherein each agent's strategy is a best response to all other agents' strategies, and agents' beliefs are consistent with those strategies.

The rational choice literature on bureaucracy has primarily focused on two, interrelated, problems: delegation and special-interest influence. Models of delegation involve a government granting authority to a bureaucratic agent. The crucial problem for the government lies in the fact that the bureaucracy may not perfectly share its preferences. The government must, therefore, oversee bureaucratic decisions and provide incentives to ensure that the bureaucracy acts in the desired manner. This problem closely relates to the branch of microeconomics known as principal–agent (or contract) theory, which examines a similar problem between firms and their employees.

Models concerned with the influence of special interests focus on the interaction between the bureaucracy and the private sector. Private sector agents may wish to manipulate the behavior of bureaucrats. The mechanisms to do so may involve bribery, appeals to bodies charged with bureaucratic oversight, or the provision of jobs to former members of the bureaucracy (following the principle of the “revolving door). Such models may also relate to delegation, as the government may wish to curtail special-interest influence and will conduct oversight accordingly.