Publication

Why does information get garbled and 'misaligned' within a government? To answer this question, this paper analyzes two policy decision schemes – decentralization and centralization – within a two-sided incomplete information principal-agent framework. The paper's authors conclude that the quality of the information that's communicated will depend on 1) the misaligned or conflicting interests that exist between different levels of a government; 2) the government strata that controls just how decentralized the overall system is or not; and 3) the relative weight put on private, local and central government knowledge about a particular policy.