| Abstract: | Discretion is examined as a feature of the design of rule-guidedsystems. That is, given that rules have to be administered bysome group of persons, called adjudicators, and given that theirgoals may be different from society's (or a relevant organization's),when is it socially desirable to allocate discretionary authorityto the adjudicators and, if so, to what extent? The answer reflectsa tradeoff between the informational advantage of discretion—thatadjudicators can act on information not included in rules—andthe disadvantage of discretion—that decisions may deviatefrom the desirable because adjudicators' objectives are differentfrom society's. The control of discretion through limitationof its scope, through decision-based payments to adjudicators,and through the appeals process, is also considered. |
