Administrative Regulation:
Deliberative Democracy and Aumann’s Agreement theorem

I have for the time being abandoned this project but remain interested in the topic

One of the most salient problems of administrative law is discretion, which tends to increase with the rise of the regulatory state and renders bureaucracy over-powerful and unaccountable. A possible answer suggested by the public law scholarship is the direct engagement of the regulated in the process of administrative rule-making, thus making discretion not a form of authority, but a forum for politics. The apparent inspiration of this response comes from the concept of deliberative democracy: wide participation of everybody, who is affected by the regulation, solves the problem of the discretionary authority.

The deliberative democracy paradigm is seen by many scholars as unattainable or even naпve. Its basic assumptions seem to be the polar opposites of the assumptions of the law and economics paradigm. Yet they have a broad common ground in their shared reliance on rationality. Habermas, who is the major advocate of the deliberative democracy, relies on rational discourse which includes all informed participants, to reach a consensual decision. On the other side, while Buckanan and Tullock persuasively prove that the increasing costs of such decision make it unattainable, Aumann has proved equally persuasively that rational people not only can but must agree.

I am interested in the possibility to build on this common ground between the two hostile traditions and investigate the possible institutional arrangements that may reduce the costs of consent and promote consensual decision-making in various regulatory agencies. Thus I try to develop a model, in which rational Actors with ideal points at the opposite ends of a preference scale attempt to persuade a Regulator who has authority to choose a point on the scale. The Actors are utility maximizers (as the public choice approach sees them) yet they can maximize their utility only if they rationalize their claims, i.e. if they present  knowledge-based arguments to prove that the ideal point of the whole society coincides with (or is closer to) theirs (as deliberative democracy theory requires the output to be). Apparently the expertise available to the Regulator is the most important factor that ensures that only rational arguments are made by the parties; it is provided by its own bureaucracy, but also by various third parties that are not directly interested. Thus only decision-making in the public sphere can be sufficiently rational.

Further to the abstract modeling I will seek for some empirical examples of regulatory agencies, which employ civic participation in the process of decision-making and will evaluate them against the model. In turn the model will be modified to reflect the actual situation. Thus the core of the study I am interested to pursue will be an economic analysis of several exemplary regulatory regimes in Europe. Its results will be valuable contribution for the public law research on legitimacy and accountability of administrative agencies and on administrative discretion. My more ambitious goal is to establish decision-theory grounds for the concept of deliberative democracy.