Public institutions are a result of processes that gather preferences of society to formulate public mandates; that collect and distribute revenue; that determine parameters for implementing these public mandates under the guidance of law. Behind these processes are agents who uphold them. This inevitably exposes the integrity of these processes to vulnerabilities. For instance, agents may have motivations which conflict with institutional goals, or the design of institutions may be inapt in empowering agents to achieve institutional goals. These vulnerabilities can lead to a rift between the intent behind the design of our public institutions and what we observe in practice. This research documents such rifts and studies improvements in the design of our public institutions so that what we observe in practice looks more like what we intend. Monitoring policies designed to maximize deterrence of unwanted behavior must account for attempts by agents to evade detection. Chapters 1-2 of this dissertation, Optimal Monitoring and Bureaucrat Adjustments, examine the strategic responses of bureaucrats, who implement India's employment guarantee program, as their expectations of being audited change. Exploiting random assignment to audit timing over multiple waves (without replacement), I find the rate of deterrence for misappropriated expenditures is increasing in bureaucrats’ expectations of being audited. In addition, bureaucrats evade detection by adjusting the timing and type of expenditure to misappropriate. Applying a model of Bayesian persuasion, I analyze how information communicated on the likelihood of being audited should be designed. I estimate a sufficient statistic from the model to solve for the optimal signal and analyze welfare under counterfactuals. Concentrated incentives, i.e. notifying of audit timing in advance, would have persuaded bureaucrats to misappropriate USD 35m less in expenditures (16% of average annual expenditures) compared to dispersed incentives, i.e. messages are uninformative and audit timing is unpredictable. Chapter 3, Productivity along the Police Hierarchy (with Bocar Ba and Roman Rivera), empirically shows how hierarchical structure drives productivity in organizations. We estimate the effect that bureaucrats at various managerial levels of the hierarchy have on organizational performance. Using data from the police workforce in Chicago, we decompose the dispersion in police productivity in reported crime and arrests into components resulting from hierarchical structure. We find that a substantial amount of the variation (7-50%) is driven by three components: the design of the managerial positions along the hierarchy along with competency of those who fill those positions, as well as idiosyncrasies in matches of individuals across- and within-ranks working together along the hierarchy.




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