FIRE-ALARM SIGNALS AND THE POLITICAL OVERSIGHT OF REGULATORY AGENCIES

In political settings, delegation is often motivated by differences in expertise or costs of information gathering. Even if a political prin cipal is less well informed than a regulatory agency, she can monitor whether the agency is acting in her best interests by taking informati onal cues from the media, interest groups, and constituents. In respon se to such ''fire-alarm'' signals, the principal may engage in politic al oversight activities. This article examines how asymmetric external information flows give rise to asymmetric political control rules tha t introduce bias and inconsistency into regulatory outcomes.