Quarterly Journal of Political Science > Vol 10 > Issue 2

Useless Prevention vs. Costly Remediation

Jean Guillaume Forand, Department of Economics, University of Waterloo, Canada, jgforand@uwaterloo.ca
Suggested Citation
Jean Guillaume Forand (2015), "Useless Prevention vs. Costly Remediation", Quarterly Journal of Political Science: Vol. 10: No. 2, pp 187-220. http://dx.doi.org/10.1561/100.00014068

Published: 24 Jun 2015
© 2015 J. G. Forand
Bureaucracy,  Elections

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In this article:
1. Model
2. Remarks
3. Strategies and Equilibrium
4. Observable Initial Problems
5. Choosing Between Prevention and Remediation
6. Cost-Minimising Equilibria
7. Agent-Appropriated Budgets
8. Conclusion


I model the dynamic agency relationship underlying prevention. In each period, a principal sets a budget for an agent that has private information about a problem, which the agent can direct to solving the problem or divert into rents. Problems are persistent and rectifiable: they randomly generate observable disasters until enough resources have been committed to solving them. I characterise the principal's equilibrium trade-off between (a) preventing disasters while squandering transfers in informational rents to agents facing trivial problems and (b) limiting transfers and remediating costly disasters that eliminate agents informational advantage and prove the need for action.