A BRIEF SKETCH OF THE FRAMEWORK
We view public policies as the outcome of intertemporal transactions among political actors. Our dependent variable, Y ( in Figure 1.1), represents the features of public policies: their stability, adaptability, coordination, and other qualities. The appendix to this chapter discusses these dependent features in more detail.
We explain policies and their features as the outcome of a policy-making game ( in Figure 1.1), emphasizing the intertemporal nature of the transactions underlying policy choices and implementation. Formally, let G: X × Z → Y denote the policy-making game, played under the rules of the game X over the issues with characteristics Z, in which the characteristics of policies Y are determined.
The transactions that political actors are willing and able to undertake will depend on the political characteristics of the policy issues under consideration ( in Figure 1.1). More specifically, we follow the literature on transaction cost politics in emphasizing some transaction characteristics of policy issues, such as the intertemporal patterns of payoffs for different actors. The vector Z summarizes those transaction characteristics. As in transaction cost economics, different political issues can be characterized by a number of properties. These properties are important in determining the ease of implementing a particular agreement. They include the number and cohesiveness of the political actors involved, the degree of irreversibility of the assets involved in the policy, the intertemporal pattern of payoffs to the actors, the duration of the policy exchanges involved, the ease with which performance can be measured, the observability of shocks, the urgency with which the policy needs to be implemented, and the degree to which the policy benefits broad or narrow interests.