The extended budgetary game

In chapter 4 bureaucratic supply behaviour was considered from the perspective of its effects upon the preferences of the individual politician. It seems reasonable to assume that if the political authority consists of a collective body, the bureaucrat will not only take into account the effects of strategic cost revelation upon individual preferences, but also the effects upon the outcomes of political decision-making. In other words, the bureaucrat will pay attention to interaction among politicians and she will make her strategy choices in view of her expectations. Furthermore, it may be assumed that as soon as decision-making involves more than a single service, not only does politico–bureaucratic interaction become a relevant aspect of the budgetary game, but also interaction among the bureaucrats themselves. That is to say, bureaucrats will take into account the supply behaviour of other bureaucrats in order to optimize their strategies.

The endogenization of bureaucratic strategies implies that bureaucrats enter as fully-fledged players into the budgetary game. In the resulting extended game, the bureaucrats are entirely different kinds of players than the politicians. This distinction concerns both the objectives which motivate each kind of player and the types of ‘moves’ each kind of player is allowed to make. The objectives and the moves have been discussed in chapters 3 and 4 respectively; it has been assumed that politicians seek the implementation of preferred policies, and that bureaucrats seek some optimal combination of Managerial Discretionary Profit (MDP) and output. Furthermore, the moves of politicians were assumed to consist of votes and those of bureaucrats of transformations of the Apparent Budgetary Cost Function (ABCF), in the sense discussed in chapter 4.