SOUNDING BOARD is an outlet for opinions on good and crazy things going on at home (wherever I may be). All are welcome. You are not expected to bring anything except your common sense & sense of humor.
'If the automobile had followed the same development cycle as the computer, a Rolls-Royce would today cost $100, get one million miles to the gallon, and explode once a year, killing everyone inside.'
-Robert X. Cringely (from geek wisdom)
Congress, which is composed of the Upper House (Senate) and the Lower House (Congress), acts through their respective congressional oversight committees in seeing to it that agencies implement the policies that they enact. Congress and the agencies encounter a principal-agent problem, i.e., a problem that arises when an agent (agencies) pursues its own goals, which are not consistent with that of the principal (congress). In some cases, these hearings are political posturing (Cameron, C.M. and Rosendorf B.P., 1993. A Signaling Theory of Congressional Oversight. Games and Economic Behavior [online], 5 (1). Available from: http://www.idealibrary.com/links/toc/game/5/1/0 [Accessed 24 March 2002].). This is an opportunity for legislators to make a good impression or get media’s attention. However, in some cases, these hearings are signals that reveal their priorities. This is the case being shown here.
The relationship between congress and agencies may be adequately explained by game theory, particularly by the 'congressional hearing game', the principles of which are based on 'The Auditing Game' in (Rasmusen, E., 2001. Games and Information: An Introduction to Game Theory, 3rd ed. Oxford: Blackwell Publishers, Inc.). The game is played by 2 players – legislature and agencies. Congress plays the principal while government agencies play the agent. Congress convenes oversight committee hearings to check if they agencies are complying with the policy. Agencies are required to attend the hearings and be subject to the committee’s inquiry. Print and TV media cover the committee hearings. Therefore, they have two strategies each. For congress, it decides whether to conduct hearings or not. For agencies, they decide whether to comply with the policy or not. The game is continuous, with congress as the first mover, i.e., signaling its resoluteness in seeing to it that agencies comply. The payoffs are ordered as: {congress, agencies}.
In the absence of a direct sanction, the public hearings conducted by the legislature can function as deterrent to non-compliance. There is no Nash equilibrium here, i.e., a situation where neither player wishes to change strategies as neither one of them gains by doing so. Upon receiving feedback, congress convenes public hearings and agencies comply with the policy (hearing, comply). Congress gains good publicity as well as agencies. Civil society groups and the public at large will view them as “doing their job” and hence giving due attention to women’s issues. However, Congress could not afford to conduct committee hearings on this particular policy all the time. Hence, the conduct of a hearing sends a signal of resoluteness of Congress to pursue the issue. When agencies start complying, Congress shifts back to 'no hearing'. This situation - wherein Congress does not call agencies to a committee hearing or inquiry and agencies comply – is an ideal situation. Unfortunately, when agencies realize that Congress is not conducting committee hearings, the deterrent function of hearings is relaxed. Therefore, agencies have an incentive not to comply, or, stating it in another way, non-compliance is not penalized with any (proxy) 'sanction'. When compliance falls again, Congress begins to show resoluteness on this issue, and the cycle goes on (please refer to broken arrows). The 'equilibrium' here is in mixed strategies. The best strategy for Congress, for example, is to conduct hearings from time to time only, given that it is costly for them to conduct hearings all the time. The best strategy for the agencies is to comply all the time, but as soon as congress stops conducting hearings, agencies have a bigger payoff if they do not comply. The broken arrows show the movement of mixed strategies.
The analysis above assumes that the agencies’ payoff (pegged to -1) is not so high that will deter the agencies from not complying. If the cost of complying is so high for some agencies (assume greater than F), then the movements will be different. Simply put, even the threat of being subjected to a committee hearing will not deter non-compliance. In which scenario is this possible?
The budget quota (gender budget quota amounting to 5% of agencies' budget) is a regarded as a prized victory of the women’s movement in the Philippines. Therefore, any proposal to scrap the quota is not politically acceptable given the dynamic civil society in the Philippines. This is fine insofar as the operational definition of compliance (i.e., submission of plans) is maintained. If it is extended to cover meeting the quota, most agencies will have difficulty in complying. This will reflect a lower compliance rate. For example, among the 123 agencies which complied in 2000, only 33 agencies allocated at least five percent of their total budgets to gender concerns. In our game matrix above, if the cost of compliance is higher, hearings will not be a deterrent. Ultimately, even congress may decide not to conduct hearings at all if they see no effect on overall compliance.
posted by Allan at 6:54 AM (GMT+8)
permalink (URL of this post) ::
