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7 J. Legal Analysis 1 (2015)

handle is hein.journals/jlegan7 and id is 1 raw text is: REGULATION AS DELEGATION Oren Bar-Gill* and Cass R. Sunstein ABSTRACT In diverse areas-from retirement savings, to fuel economy, to prescription drugs, to consumer credit, to food and beverage consumption-government makes personal decisions for us or helps us make what it sees as better decisions. In other words, gov- ernment serves as our agent. Understood in light of Principal-Agent Theory and Behavioral Principal-Agent Theory, a great deal of modern regulation can be helpfully evaluated as a hypothetical delegation. Shifting from personal decisions to public goods problems, we introduce the idea of reverse delegation, with the government as principal and the individuals as agents. In diverse areas-from retirement savings, to consumer credit, to prescription drug use, to fuel economy and energy efficiency rules, to tobacco consumption, to food and beverage consumption-government makes decisions for us or endeavors to help us make better decisions. In other words, government serves as our agent. Principal-Agent Theory (PAT), broadly applied in econom- ics and political science, can serve as a useful framework for considering the optimal scope and nature of this assistance that our agent, the government, provides. It is quite common to talk about government as the agent of the People in a democratic society (Ackerman 1993).1 Our focus is not on the People, but rather on an individual person. Accordingly, we are thinking about personal decisions-decisions whose primary effect is on a single principal, an Professor of Law and Economics, Harvard Law School, 1525 Massachusetts Avenue, Cambridge, MA 02138, E mail: bargill@law.harvard.edu Robert Walmsley University Professor, Harvard Law School. We are grateful to Meirav Furth and Lisa Marrone for excellent research assistance. For helpful comments and discussions, we thank John Beshears, Ryan Bubb, Jacob Gersen, David Laibson, Oliver Hart, Daryl Levinson, and Matthew Stephenson. We are especially grateful to the editors of the JLA and to the referee for their comments and suggestions. 1 For a critical review, see Vermeule (2015). PAT has also been used in political science to characterize and analyze relationships between different government actors, e.g., President and administrative agencies or Congress and administrative agencies (See: Cook & Wood 1989; Gersen 2010). © The Author 2015. Published by Oxford University Press on behalf of The John M. Olin Center for Law, Economics and Business at Harvard Law School. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.permissions@oup.com doi:10.1093/jla/lavOO5

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