Government organizations often compete not cooperate.  They compete for funding from the central government and if say the C.I.A. succeeds in some task and the N.C.T.C. does not, money, status, access etc. might move naturally towards the former from the latter.  If the N.C.T.C. helps the C.I.A. catch a terrorist, ironically, their own hard work is punished.  On the other hand, competition helps to give the bureaucracies the incentive to work hard.  That is, the positive effect that must be counterbalanced against the negative effect on incentives to cooperate.  What is the optimal incentive scheme?

This seems like a pretty important question and someone has studied an important part of it.  The classic paper is Hideshi Itoh’s Incentives to help in Multi-Agent Situations.

Suppose the marginal cost of helping is zero at zero effort of helping.  Then, if one agent’s help reduces the other’s marginal cost of effort at his main task, it is optimal to incentivize teamwork.  How do you do that?  One agent has to be paid when the other succeeds.  The assumptions that efforts are complements and that the marginal cost of help is zero at zero do not seem to be a big stretch in the present circumstances.  The benefits of greater competition, lower resource costs, must be traded off against the costs, less cooperation and hence more chance of a successful terrorist attack if “dots are not connected” across organizations.

Itoh also shows that if the marginal cost of helping is positive at zero help, the optimal scheme either involves total specialization or,  more surprisingly, substantial teamwork.  This is because giving agents the incentive to help each other just a little is very costly, given the cost condition.  So, if you are going to incentivize teamwork at all,  it is optimal incentivize large chunks of it.   If the benefits of catching terrorists is large, this logic also pushes the optimal scheme towards teamwork.

With much information classified, it is impossible to know how much intra-bureaucracy competition contributed to intelligence failure.  But whether it did not or not, it is worth ensuring that good mechanisms for cooperation are in place.

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