Handbook of American Public Administration
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Handbook of American Public Administration

Edited by Edmund C. Stazyk and H. G. Frederickson

The Handbook of American Public Administration draws on the expertise of established and emerging scholars to provide national and international audiences a comprehensive review of the current state and future direction of theory and practice in US public administration. The authors provide a cross-disciplinary, holistic review of the field and pave an agenda for future research.
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Chapter 9: Bureaucratic discretion in public agencies: principals, principles, and agents

Laura Langbein

Abstract

Principal–agent theory applies in both the private and public sectors, but the public sector is the more general form of agency theory because it describes organizations based on the extent to which outputs (and outcomes) can be monetized, including information asymmetry, transactions costs, agent discretion, the salary structure, performance measurement, and the common conclusion that public organizations are inefficient. It uses this framework to explain common implementation difficulties in public sector organizations as varied as the Veterans’ Health Administration, local criminal law enforcement, social workers, and teachers. It concludes that once we account for the extent to which performance cannot be monetized and include multiple and disagreeing principals in studies of the behavior of public agents, we may find that they have less discretion than we previously thought: they are only choosing the principal, not the principle.

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