Some points are noteworthy with reference to the foregoing discussion.
First, the game-theoretic framework is particularly important for examining the phenomenon of identity as it situates the individual within an organizational structure that allows strategic interaction among the players. Indeed, the notion of identity can only be meaningfully studied in a game-theoretic setting because it
ͳͷ
allows the dependence of an agent’s utility on his identity as well as on other agents’ actions. Second, the analysis contributes to an enhanced understanding of the process of policy formulation by the bureaucracy in an environment where some agents may be distinguished by their distinct identities.
Third, by linking identity with organizational structure, we provide a conceptual elaboration of how identity plays out in a bureaucratic hierarchy where players in supervisory positions have identity while players in subordinate roles have no identity.
Finally, by demonstrating how the equilibrium values of the key variables are influenced by the interaction of identity, organizational structure and personal preferences of the players, we shed new light on the determinants of public policy in a bureaucratic organization.
Our analysis also demonstrates how public policy responds to exogenous changes through the interplay of insider identity of the boss, organizational structure of the bureaucracy and preferences of principal and boss. It is shown that the insider identity of the boss is more important than his personal preferences in determining the policy direction. It is important to emphasize here that while identity drives the behaviour of the boss in important ways, it plays little role in influencing policy outcomes in some circumstances. For example, in a strategic setting, while the boss takes due cognizance of the preferences of the principal in determining public policy, it is the identity of the boss that underpins the principal’s decision to allocate more budget to the bureaucracy. On the other hand, an increase in the opportunity cost of the budget forces a budgetary cut regardless of the boss’
identity. Besides the question of how and when identity plays a significant role in
ͳͷͺ
determining policy outcomes, the role of identity must be underscored as an instrument to encourage bureaucracy to follow the dictates of the principal. As the identity of the boss is linked to the pursuit of a specific organizational goal, the principal may develop effective mechanisms to influence the identity of a bureaucrat so that his organizational goal becomes aligned with preferences of the principal. In this sense, the identity of a bureaucrat can become a self-disciplining device that keeps him on course in the choice and implementation of public policies and hence reduces the likelihood of discord between principal and bureaucracy.
For an illustration of how preferences of bureaucrats and their productivity interact and influence policy outcomes, consider a situation in which the bureaucracy is asked to improve the development condition in a city. It could involve improving the drainage system, building highways, public health sector or education.
Bureaucracy may have a norm or mission to allocate more budgets to highways rather than to health and education. Let us assume for highways in the city the bureaucracy needs to facilitate land acquisition along with measures for anti-encroachment. How meticulously the bureaucracy appraises each individual application for land acquisition represents effectiveness of policy at the implementation stage. The policy, even though very efficiently crafted on a technical level, may still prove ineffective if the bureaucracy does not invest sufficient effort to develop the competence to implement effectively. For example, if the bureaucracy were to invest low effort through insufficient staffing, or lack of technical support in reviewing permit applications it would be much more prone to erroneously grant permits when they should not have been granted or deny permits when they should have been granted. In both cases the policy is
ͳͷͻ
ineffectively implemented due to lack of productivity. This example — along with many others in which agencies grant or deny permits, make licensing decisions, provide disaster relief, housing, and other government aid --- illuminates how the overall quality of agency operates in the model. If the Agency invests insufficient effort then, regardless of its policy choice, the quality of outcomes suffers through lack of policy precision, and overall policy outcomes would be lower than promised.
In our set-up identity-driven choices of policymakers are influenced by bureaucracy’s productivity, which can be construed as effectiveness of policy implementation (Carpenter 2001). For example, a senior bureaucrat may get assistance from international development agencies to build a water project while he has preferences for highways. If boss is able to motivate those working under him to get the job done well in the water project, then he may be compensated for his utility loss (due to choice of water project instead of highway) by the enhanced productivity of a sub-ordinate, which yields more public output.
It is thus clear that an agency’s productivity is crucial for the quality of policy outcomes as it impacts upon the choices of both boss and principal. The higher the level of effort invested by the agency toward implementation, the more precise are policy outcomes. Consequently, as agencies choose policy along some substantive or ideological dimension they must also effectively implement or enforce policy in practice (Carpenter 2001; Derthick 1990; Lipsky 1980).
The bureaucrat’s identity also determines whether the political principal will make fiduciary investment23in terms of budgetary resources of the agency (Krause and
ʹ͵
Ǥ
ͳͲ
O’Connell 2012). Furthermore, the degree of trust by principal (politician) on agent (bureaucracy) will be conditioned by organizational norms of the agency.
As Moe (1985) writes that a political principal entrusts a responsive bureaucrat and bestows him with authority and resources with the belief that he will pursue the principal’s policy goals. A bureaucrat without identity may place more weight on complying with the political principal’s goals and hence can attract more budgetary resources. Similarly, in deciding about fiduciary investments, the principal may rely on bureaucratic competence24, which increases the reputation of the agency to carry out a particular policy task (Carpenter and Krause 2012;
Gailmard and Patty 2007).