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Public Choice
Published in: Public Choice 3-4/2023

21-10-2022

Bureaucratic beliefs and law enforcement

Authors: Fuhai Hong, Dong Zhang

Published in: Public Choice | Issue 3-4/2023

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Abstract

Why are laws and contracts effectively enforced in some developing countries but shelved, undermined, or sabotaged in others, even when formal institutions are in place? We develop a model to explore the interaction between the ruler, front-line bureaucrats, and civilians. We emphasize that bureaucrats’ beliefs play a vital role in determining law enforcement outcomes. Bureaucrats’ beliefs about the ruler’s type determine their expectations about whether the ruler would launch an investigation when observing law non-enforcement, which then shapes their incentive to enforce laws. The ruler’s discretion to pursue personal interests has a signaling value as to his or her type. Our game generates a unique separating equilibrium, wherein ruler types differ in whether to exercise discretion to advance personal interests and the bureaucrats enforce the law if and only if not observing the ruler’s discretion. The game also yields two pooling equilibria where different ruler types choose the same strategy. We illustrate the theoretical insights with a comparative discussion of rulers in weak states and in developmental states.
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Appendix
Available only for authorised users
Footnotes
1
Note that the cost of enforcing the law, E, must be distinguished from the penalty in Game LE, f.
 
2
The cost C also includes the ruler’s intervention cost of removing the bureaucrat and enforcing the law in the second round of the social game. Since law non-enforcement occurs if and only if the fighting equilibrium in the first round of the social game is witnessed, the ruler’s investigation and intervention will go hand in hand in equilibrium.
 
3
They are a pure transfer. In Spence’s (1973) classic education-as-a-signal model, education is assumed to be unproductive; the insights do not qualitatively change in an extended model when education is productive. In our model, similarly, relaxing the assumption that the ruler’s pursuit of private benefits does not harm social welfare will complicate the analysis but does not change the insights of our model qualitatively. As long as the direct impact of the ruler's discretion on social welfare (payoffs in the social game) is small enough, the social game’s equilibrium is unaffected; separating and pooling equilibria on the ruler’s discretion choice still exist in our model.
 
4
While we assume for simplicity that whether to exercise discretion is a binary decision for the ruler, as in other signaling models, our setup can be extended to cases wherein the ruler’s exercise of discretion is a continuous variable without affecting the results qualitatively.
 
5
When not observing the ruler’s discretionary action, the bureaucrat infers that the ruler is the high type and will launch an investigation if observing non-enforcement, inducing the bureaucrat to enforce the law and ultimately making the civilians produce.
 
6
The belief, which equals the proportion of type-H rulers, of course depends on a number of historical, cultural and institutional factors.
 
7
The only exception is Proposition 2(a), where both types of ruler exercise discretion while the bureaucrats enforce the law because their prior belief about the ruler’s type is sufficiently large \(\left( {p > \frac{E}{W}} \right)\).
 
8
BBC News, August 30, 2000, “Mobutu’s Legacy: Show over Substance,” http://​news.​bbc.​co.​uk/​2/​hi/​africa/​903324.​stm (last accessed on July 9, 2022).
 
9
We thank the guest editor for raising this insightful point.
 
10
The self-disciplined leadership in the Asian developmental states is also partially attributed to the presence of external threats. See, e.g., Doner, Ritchie and Slater (2005), for a discussion.
 
11
See also Kimenyi and Shughart (2010) on Kenya.
 
12
See Holmstrom & Milgrom (1987, 1991) for a general analysis of high-powered contracts.
 
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Metadata
Title
Bureaucratic beliefs and law enforcement
Authors
Fuhai Hong
Dong Zhang
Publication date
21-10-2022
Publisher
Springer US
Published in
Public Choice / Issue 3-4/2023
Print ISSN: 0048-5829
Electronic ISSN: 1573-7101
DOI
https://doi.org/10.1007/s11127-022-01003-2

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