| Chapter 1: | Introduction |
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act on their own initiative to continuously monitor the work of agencies. When legislators engage in fire-alarm oversight, they respond on a more ad hoc basis to concerns raised by citizens and interest groups.10 Using a cost/benefit calculus, McCubbins and Schwartz originally posited that legislators would be more likely to employ a fire-alarm approach, devoting time and resources to oversight only when it was politically advantageous. However, subsequent research demonstrated that legislators and their staff devoted substantial time and energy to monitoring bureaucratic activities on an ongoing basis.11 Therefore, principal-agent theorists now readily accept the proposition that police-patrol oversight is more beneficial to principals than originally believed.12
Other scholars have asserted that ex-post controls consist of a broader repertoire of mechanisms that includes oversight, budget appropriations, and the selection of agency heads. Principals use a combination of these mechanisms to create incentives for regulatory agencies to pay heed to the principals’ own political preferences. In their study of the Federal Trade Commission, Weingast and Moran concluded that throughout the 1970s, Congress employed hearings, appointments, and budgetary authority in order to exert continuous control over the scope and direction of agency policy.13 Research by Terry Moe, as well as work by Wood and Waterman, demonstrated that presidents have also employed ex-post controls and that the appointment of agency heads is a particularly effective way for a chief executive to change the trajectory of regulatory policy.14
Overall, principal-agent studies have broadened scholarly understanding of regulatory agencies. In particular, these studies have provided systematic theoretical accounts of how external political actors attempt to strategically influence regulatory agency decision making. Principal-agent studies have also strongly suggested that institutional design plays a role in determining how