Game Theory and the Structure of Administrative Law
How should administrative agencies choose among the different policymaking instruments at their disposal? Although the administrative law literature has explored this question with respect to the instruments of adjudication and rule making, it has failed to appreciate two other powerful instruments at agencies’ disposal: advance ruling and licensing. Taking these four policy-making instruments into consideration, this Article provides a general theory to guide agencies in selecting the most suitable policy-making instrument in different policy environments. To do so, the Article utilizes a new game-theoretic framework, focusing on two central dimensions of policy-making instruments in particular: timing and breadth. This framework provides two valuable implications. First, it highlights two key administrative challenges that are underappreciated by the academic literature: the holdup and leniency problems. And second, the framework shows that administrative agencies are underutilizing two powerful policy-making instruments, namely, licensing and advanced rulings. I argue that these two instruments are valuable across areas of law.