Agency Budgetary Risk Preferences under Context Dependent Uncertainty: An Analytical Inquiry

摘要: Little attention has been given to the systematic analysis of how bureaucratic agencies make decisions under conditions of uncertainty. Investigating the risk preferences of administrative agencies allows for greater understanding of how these organizations arrive at such decisions. In this study, the theoretical relationship between an agency’s budgetary decision making and the amount of uncertainty (volatility) that it experiences is examined. A plausible range of theoretical conditions that reflect agency budgetary risk averse, risk neutrality, and risk acceptant behavior are derived from this deductive analysis, taking into account the differential context in which uncertainty effects agency utility under divided versus unified party government. This paper concludes by discussing the implications of these theoretical results for understanding administrative agencies’ preference for organizational slack.