Why Delegate? by Neil J. Mitchell

Author:Neil J. Mitchell
Language: eng
Format: epub
Publisher: Oxford University Press
Published: 2021-04-15T00:00:00+00:00

4

Agreement

If not to happiness, there is a route through delegation to resolving disagreement. Delegating to a dispute-resolving agent prevents social and economic life from grinding to a halt. Parties to a marriage contract or a trade treaty fall out from time to time. A way forward is to find an autonomous agent to council, mediate, or decide the matter. It is a division of labor that facilitates economic progress, as does delegating tasks on the production line. Without the expectation of some method of adjudicating disputes and getting both sides to live up to agreements, we would be reluctant to invest our energy and time in an enterprise. Ordinary life would become intolerable. Even a game of football would be problematic. To get things underway, players agree to the rules of the game and to the idea of a neutral referee with the discretion to interpret and enforce the rules. Once underway, the players, partial to their own interests, do what they can to fool or bias the referee.

For joint endeavors and the games we play, we need rules, confidence that they will be interpreted fairly, and some capacity to be a good loser in this type of delegation relationship. Not all the agent’s decisions will be favorable, all of the time. Some scholars argue that with his unusual autonomy and the latitude to make decisions at the expense of the principal, this agent escapes the theory. They use the term trustee instead. But following Occam’s razor, terms should not be added unnecessarily. As David Lake and Matthew McCubbins say, incomplete control is central to principal-agent theory, and “trusteeship status” is “fully expected by the theory and follows from the need for substantial autonomy to perform the tasks for which courts are responsible.”1 The dispute-resolver is consistent with the simpler theory, with the mechanisms it describes and the struggle for control that it depicts. This delegation is set up under the norm of impartiality in order to induce parties to get in the game or agree to a resolution. On the principal’s side, the initial selection of the dispute-resolving agent is a key instrument in the principal’s struggle to maintain control. Once appointed, substantial discretion is a necessary feature of the relationship for this type of agent to perform a this task. The principal uses fair means—and sometimes foul—to influence that discretion.

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