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3 Pages

Policy Making: Presidential Transaction Costs

WithRichie Romero, José D. Villalobos

This entry focuses on presidential managerial transaction costs, particularly with respect to presidential policy development in the executive branch. To be adept managers and policy leaders, presidents must effectively collect, organize, and sort out information derived from an assortment of executive branch personnel. Whether seeking responsive input from inner White House personnel or from the policy expertise of agency civil servants, presidents may experience a measure of friction or “transaction cost” in the form of opposing viewpoints and contradictory interests espoused by such personnel. Therein, presidents face the challenge of attempting to effectively maneuver through transaction costs while seeking to maximize policy performance outputs and outcomes. Recent research suggests presidents may be better off adopting a decentralized policy development approach that addresses transaction cost issues up front in order to lower friction at the legislative passage and bureaucratic implementation stages.