Governance of Crown Financial Assets

This paper investigates the agency problems associated with the public management of a large financial asset portfolio. After considering the relevant theoretical and empirical literature, a set of institutional arrangements are presented that should reduce the extent of the potential agency problems faced. Key design features include: mechanisms for enhancing policy credibility; the use of existing market mechanisms and regulation where possible; and the creation of a public-sector institution to perform administrative functions. The paper does not consider the issues of optimal fiscal policy, or the appropriate risk tolerance for the Crown, although the conclusions drawn from this study may contribute to these debates.

Public officials and their institutional environment - an analytical model for assessing the impact of institutional change on public sector performance

To perform well, public officials must be confident enough about the future, to be able to see a relationship between their efforts, and an eventual outcome. Their expectations are shaped by their institutional environment. If the rules are not credible, or are unlikely to be enforced, of if they expect policies to be contradicted, or resources to flow unpredictably, results will be uncertain, so there is little point in working purposefully. The authors present an analytical framework, used to design a series of surveys of public officials'views of their institutional environment, and to analyze the information generated in fifteen countries. They describe how survey results help map public sector's strengths, and weaknesses, and offer an approach to identifying potential payoffs from reforms. The framework emphasizes how heterogeneous incentives, and institutional arrangements are within he public sector. It emphasizes how important it is for policymakers to base decisions on information (not generalizations) that suggests what is most likely to work, and where. In building on the premise that public officials'actions - and hence their organization's performance - depend on the institutional environment in which they find themselves, this framework avoids simplistic anti-government positions, bur doesn't defend poor performance. Some public officials perform poorly, and engage in rent seeking, but some selfless, and determined public officials, work hard under extremely difficult conditions. This framework offers an approach for understanding both bad performance, and good, and for presenting the results to policymakers in a format that leadsto more informed choices, about public sector reform. Types of reforms discussed include strengthening the credibility of rules for evaluation, for record management, for training, and for recruitment; ensuring that staff support government policy; preventing political interference, or micro-management; assuring staff that they will be treated fairly; and, making government policies consistent.Public Health Promotion,Decentralization,Educational Sciences,Enterprise Development&Reform,Health Monitoring&Evaluation,Educational Sciences,National Governance,Governance Indicators,Poverty Assessment,Health Monitoring&Evaluation

Objective versus Subjective Performance Evaluations

Why does incentive pay often depend on subjective rather than objective performance evaluations? After all, subjective evaluations entail a credibility issue. While the most plausible explanation for this practice is lack of adequate objective measures, I argue that subjective evaluations might sometimes also be used to withhold information from the worker. I furthermore argue that withholding information is particularly important under circumstances where the credibility issue is small. The statements are derived from a two-stage principal-agent model in which the stochastic relationship between effort and performance is unknown

"Obedient Servant or Runaway Eurocracy? Delegation, Agency, and Agenda Setting in the European Community"

Do supranational institutions matter - do they deserve the status of an independent causal variable - in EC policymaking? Does the Commission matter? Does the European Court of Justice? Does the European Parliament? Is the European Community characterized by continued member state dominance, or by a runaway Commission and an activist Court progressively chipping away at this dominance? These are some of the most important questions for our understanding of the European Community and of European integration, and have divided the two traditional schools of thought in regional integration, with neofunctionalists [Haas 1958; Lindberg & Scheingold 1970] generally asserting, and intergovernmentalists [Hoffmann 1966; Taylor 1983; Moravcsik 1991, 1993] generally denying, any important causal role for supranational institutions in the integration process. By and large, however, neither neofunctionalism nor intergovernmentalism1 has generated testable hypotheses regarding the conditions under which, and the ways in which, supranational institutions exert an independent causal influence on either EC governance or the process of European integration. This paper presents a unified theoretical approach to the problem of supranational influence, based largely on the new institutionalism in rational choice theory. Simplifying only slightly, this new literature can be traced to Shepsle's [1979] pioneering work on the role of institutions in the US Congress. Beginning with the observation by McKelvey [1976], Riker [1980] and others that, in a system of majoritarian decisionmaking, policy choices are inherently unstable, "cycling" among multiple possible equilibria, Shepsle argued that Congressional institutions, and in particular the committee system, could produce structure-induced equilibrium, by ruling some policy alternatives as permissible or impermissible, and by structuring the voting and veto power of the various actors in the decisionmaking process

Barriers to energy efficiency: evidence from selected sectors

To combat climate change, it is essential to reduce the use of fossil fuels and minimise greenhouse gas emissions. To help to achieve that objective, energy must be used efficiently. However, many international studies claim that companies and other organisations are “leaving money on the floor” by neglecting highly cost-effective opportunities to invest in measures that would improve their energy efficiency. A new ESRI report, “Barriers to Energy Efficiency: Evidence from Selected Sectors”, examines these claims in the context of the Irish economy, and asks why organisations apparently ignore financially rewarding opportunities to improve their energy efficiency. The report is based on detailed case studies of organisations in the mechanical engineering, brewing and higher education sectors

Civil Society Legitimacy and Accountability: Issues and Challenges

University education rarely focuses its attention and imagination on teaching students how to turn a vision into reality; how to design, develop, and lead social change organizations. The author co-created the Social Entrepreneurship Collaboratory (SE Lab) at Stanford University and then Harvard University as a model educational program designed to achieve this goal. The SE Lab is a Silicon Valley influenced incubator where student teams create and develop innovative pilot projects for US and international social sector initiatives. The lab combines academic theory, frameworks, and traditional research with intensive field work, action research, peer support and learning, and participation of domain experts and social entrepreneurship practitioners. It also provides students an opportunity to collaborate on teams to develop business plans for their initiatives and to compete for awards and recognition in the marketplace of ideas. Students in the SE Lab have created innovative organizations serving many different social causes, including fighting AIDS in Africa, promoting literacy in Mexico, combating the conditions for terrorism using micro-finance in the Palestinian territories, and confronting gender inequality using social venture capital to empower women in Afghanistan

A pied-piper situation : do bureaucratic researchers produce more science?

¿Puede un científico confiar en que el gobierno le va a pagar honestamente? En la relación entre la ciencia y el Estado, el gobernante sale ganando si no paga (o si no paga honradamente). Todo científico público, así, afronta el riesgo de que tras una carrera larga y difícil el gobernante cambie las reglas del juego. A pesar de que la solución a este problema de credibilidad es lo que da forma a las instituciones de la ciencia pública el problema ha sido rara vez estudiado teórica o empíricamente en los estudios de la ciencia. En este trabajo proponemos un modelo de esa relación entre gobiernos y científicos de acuerdo con la teoría de juegos que muestra la importancia del tipo de contrato que los vincula, el que sea más o menos burocrático en un sentido weberiano. Hasta cierto punto, los contratos burocráticos —como los de los funcionarios— protegen a los científicos contra el mal comportamiento de los gobernantes. Mediante esas reglas burocráticas, los contratos atan las manos del gobierno con lo que se hace creíble su compromiso a la vez que se protege el delicado sistema de recompensas de la ciencia. De esta manera se estimula la productividad tanto en calidad como en cantidad. Sin embargo, cuando se da el caso de gobiernos fiables los contratos burocráticos limitan los sistemas de incentivos y van en contra tanto de la receptividad de los científicos a las demandas de los gobiernos o de la sociedad como, al final, al interés de los gobiernos por el producto que ofrecen. En este trabajo utilizamos evidencia comparada entre países que confirma las proposiciones del modelo teórico y muestra cómo los contratos burocráticos estimulan la productividad científica en el caso de gobiernos poco confiables —como en el caso de las dictaduras— pero limitan esa productividad con gobiernos más fiables — como las democracias—

Carrots, sticks, and the multiplication effect

Although a punishment can be applied only once, the threat to punish (also referred to as stick) can be reiterated several times, because when parties obey, the punishment is not applied and thus the threat can be repeated. The same is not possible with promises to reward (also known as carrots), since they need to be carried on every time a party complies, and hence at each round a new reward is needed. We show that the multipliability of sticks has pervasive consequences in economics and law and provides a unified explanation for seemingly unrelated phenomena such as the dynamics of riots and revolutions, the divide-and-conquer strategy, comparative negligence, the anticommons problem, the use of property rules in markets, the most-favored nation clause, legal restrictions on penalties in employment contracts, and legal aid

F.Y. Edgeworth’s Treatise on Probabilities

Probability theory has a central role in Edgeworth’s thought; this paper examines the philosophical foundation of the theory. Starting from a frequentist position, Edgeworth introduced some innovations on the definition of primitive probabilities. He distinguished between primitive probabilities based on experience of statistical evidence, and primitive a priori probabilities based on a more general and less precise kind of experience, inherited by the human race through evolution. Given primitive probabilities, no other devices than the rules of calculus are necessary to infer complex probabilities, as the ones defined by Bayes’s theorem –an enlargement of the frequentist tradition as defined by Venn. The notion of probability is objective; the passage from this objective sphere to the epistemic one requires rules external to the theory of probability. Edgeworth distinguishes between two notions: credibility which is the direct translation of probability into the epistemic sphere, and obeys the same rules of the latter; and belief having a weak relation with probability, based as it it not only on experiential knowledge, but also on “instinct and sentiment”. According to a Nineteenth century tradition, belief is the base of human action; Edgeworth concludes therefore that probability is not useful for the theory of decision. We propose to classify Edgeworth’s theory of probability as precursor of modern eclectic or pluralistic tradition on probability, and according to which probability has an irreducible dualistic nature.F.Y. Edgeworth, Philosophy of probability, Frequentist probability, Bayes’s theorem