Experimentation and Persuasion in Political Organizations.

Different beliefs about how to achieve shared goals are common in political organizations such as government agencies, campaigns, and NGOs. However, the consequences of such conflicts have not yet been explored. We develop a formal model in which a principal and an agent disagree about the right policy for achieving their shared goals. Disagreement creates a motivational problem, but we show how both observing policy outcomes and experimenting with policies can ameliorate it. We also show that the principal often defers to the agent in order to motivate him, thereby generating more informative policy outcomes and building future consensus. Most surprisingly, she sometimes allows the agent to implement his desired policy even when she is sure it is wrong, to persuade him through failure that he is mistaken. Using the model, we generate empirical implications about performance measurement and Presidential appointments in U.S. federal agencies. [ABSTRACT FROM PUBLISHER]