This award will support collaborative research between Harold Hochman, Lafayette College, and Giorgio Brosio, University of Turin. The objective of the project is to re-examine, using experimental methods, the basic behavioral hypotheses of the theory of bureaucracy and agency. A unique aspect of this project is its comparative nature. The project will develop a better understanding of the objectives of local politicians and bureaucrats and re-examine the extent of the principal-agent problem in decision-making in both local government and the not-for-profit sector. At a positive level, the project will improve the understanding of how market and non-market institutions translate the preferences of constituents or sponsors, through fiscal and regulatory actions, into agency decisions in government and in private organizations. At a normative level, the project will determine how well existing institutions perform this function and devise constraints or incentives systems to help managers of public agencies and nonprofit organizations serve the interests of their principals. Attention will initially be directed to three services -- cultural activities, health and social services, and local transportation -- in Turin and the Piedmont region in Italy, and in New York City, Pittsburgh, and other smaller cities in the northeastern United States. Researchers from Turin have developed and refined some of the requisite methods of experimentation and interpretation that complements those of the American specialists. There are enough similarities and differences in fiscal and political responsibilities in the two countries to define an excellent base for comparative analysis.
