The legislative elections and the principal-agent problem

NOT the type of people we get working the voting centers.

Venezuela is supposed to hold legislative elections this year … emphasis on the word “supposed.” As Quico explained, the government has all the incentives not to hold the elections. The government is deeply unpopular, and no amount of tinkering with the results could hide the shellacking they’re looking to receive.

There is another reason why large scale fraud is going to be harder to pull off, and it has to do with the principal-agent problem.

Imagine you are the boss of a company, say, Walt DIsney World. Let’s call you the “principal.” As a principal, you want your employees – let’s call them “agents” – to do an outstanding job that makes it worthwhile for families to shell out the $95 it costs to get in. You want, for example, for Snow White to be exceedingly charming, and Tinkerbell to be a hyper’caffeinated ball of pluck. You want the people at the gates to greet park visitors with a cheerful smile, and make sure everyone there is treated very, very nicely. VERY nicely.

Problem is, you can’t supervise all of them! After six hours asking thousands of people going on a ride “how many in your party?” you just want to bang the first bratty kid you see in the head with the first thing you can grab – and, trust me, there are many of those.

This is a well-known conundrum in economics. It is solved mainly through incentives – something like shifting people around, randomn inspections, bonuses for good performance, have them work in teams, and even giving them stock options. These are all common techniques in management. Some organizations are really bad at this. Other, like Disney, excel.

In presidential elections, the principal-agent problem is a huge deal because there is only one person on the ballot. The principal (say, Capriles) needs to take into account that his agents (the people manning voting centers in Elorza, for example) stay there until the full count is done. He needs them to defend the votes as if they were his own. He needs them to accurately report back to headquarters when a chavista comes in with 300 cédulas ready to stuff the voting machine.

But Caracas is really, really far away from Elorza. There are something like six layers of management between Capriles and the guy in Elorza, and each of those layers has their own incentives to do their job in a half-assed manner. And when manning a voting center in San Félix means getting a gun pointed at your head … well, let’s just say the incentives end up not being aligned in a manner that allows you to take care of the 2% of the votes you need.

But in a legislative election, the problem becomes easier to solve. When you have hundreds, maybe thousands of candidates, it is easier to know what your “agents” are doing. The problem is not as acute because there are many more principals around, on the ground, close to their agents. Each one of them is more capable of effectively supervising what their agents are doing. They know the terrain, they can talk to them and align the incentives more easily.

These principals are well aware of the importance that the agents do their job. The agents are not working for some guy in Caracas who has never visited, and the guys supervising specific regions are not clogs in a big campaign machine. They are the candidates. They are working for themselves.

That is part of the reason why there are fewer claims of fraud in mayoral and legislative elections in Venezuela – it’s simply harder to pull off. And if you can’t cheat on the vote, the only way to make sure you win the election … is to make sure you don´t have one.