How much discretion for risk regulators?
研究国会将风险监管委托给机构时，如何在机构利用专业知识与可能偏向行业之间权衡，以确定最优自由裁量权水平。
We analyze the regulation of firms that undertake socially risky activities but can reduce the probability of an accident inflicted on third parties by carrying out non verifiable effort. Congress delegates regulation to an agency, although these two bodies may have different preferences toward the industry. The optimal level of discretion left to the agency results from the following trade‐off: the agency can tailor discretionary policies to its expert knowledge about potential harm, but it implements policies that are too “pro‐industry.” The agency should be given full discretion when the firm is solvent; partial discretion is preferred otherwise. We then investigate how this trade‐off changes as the political and economic landscapes are modified.