This chapter examines how observers — regulated entities and third parties — perceive the decisions made in the experiments of chapter 5. Rather than studying the trustworthiness of decision-making, that is, this chapter studies how procedures affect the trust that observers place in those decisions. Do the reasoning requirements enhance observers’ trust in decision? If so, what drives any changes in trust: the substantive decision, or the procedural accompaniments of the decision? This chapter attempts to isolate these two typically confounded components that plausibly feed into notions of public sector trust and legitimacy. The analysis indicates that both the substantive decision and the procedural accompaniments enhance perceptions of trust and legitimacy.

This is the first of two empirical chapters that probe implications of the theory using novel experiments that borrow from experimental economics. This chapter examines whether important elements of administrative law—e.g., requirements for reason-giving and analysis—affect decision-making. The basic design of the experiments involves providing people with a responsibility to distribute money under some guidelines, and then experimentally manipulates various reason-giving and analytical requirements. The experiments include elements of information asymmetry and provide participants with financial incentives to deviate from the guidelines, features intended to mimic salient characteristics of decision-making by public officials. The chapter shows that reason-giving requirements and forms of judicial review enhance the trustworthiness of those put in positions of responsibility.

This chapter presents the main theoretical argument of the book. It starts by discussing the role of representation in the Madisonian baseline. It then argues that several assumptions that may have held at the founding no longer held by the turn of the (last) century, giving rise to an acute problem of trust between the electorate and representatives. A partial solution to this problem, the chapter contends, is for the legislature to delegate authority to administrative bodies and to constrain their actions through administrative law. Under this scheme, the legislature establishes objectives (e.g., fair and reasonable railroad rates), and administrative bodies establish the means in publicly credible ways. Delegated authority thereby tends to improve the public’s welfare, as well as to serve the electoral interests of representatives who suffer under less suspicion. The appendix to this chapter presents a formalization of this argument.

This chapter lays out the core claims of the book and situates the theory in the literature. It emphasizes the limitations of the common view about expertise as a rationale for the administrative state and begins to substantiate the case for viewing credible reasoning as its distinctive feature. The chapter also contains a roadmap of the remainder of the book, previewing the argument, case studies, empirics, and normative and doctrinal conclusions.

We analyze the information problems inherent in discretionary monetary policy. Discretionary central bankers confront immense informational burdens. Some of these are technical problems only, and can in principle be overcome. But there is also a genuine knowledge problem involved in discretionary monetary policy: reacting in real time to changes in the demand for money. This problem is unsolvable. It renders discretionary central banking systematically unlikely to achieve macroeconomic stability. In contrast, rules-based policy does not confront a knowledge problem.