Strategic Proposals, Endogenous Comments, and Bias in Rulemaking

Abstract

Agencies use notice-and-comment rulemaking to issue countless regulations with substantial economic stakes. The empirical literature on rulemaking has produced a complex set of descriptive findings yet has struggled with informal concerns about selection bias. This article characterizes notice and comment as a persuasion game played between regulators and outside interests. Analysis of this stakeholder-balancing model yields three key theoretical payoffs: an informational rationale for regulators to write rules with higher private and social costs, an explanation for strategic positioning by regulators even without oversight, and clarification that adverse priors are a more powerful mobilizing force than adverse policies. The model’s two-sided selection dynamics reveal that well-established empirical regularities are inconsistent with extreme public-interest zealotry and strong capture but fit a range of intermediate outcomes. To obtain deeper insights about bias in rulemaking, the model suggests focusing on the cost of rule revision, rule movement following abstention, and variation in stakeholder preferences.