In Search of Scientific Regulation: The UHF Allocation Experiment

Abstract

This paper reports the results of one attempt to introduce an objective, quantitative, scientific mechanism for making allocational regulatory decisions. The case is the allocation of UHF television stations among cities by the Federal Communications Commission. The mechanism is an experiment which is designed to reveal the preferences of the subjects with respect to alternative allocations. Pilot experiments were performed on FCC staff, the purposes of which were to refine the experimental design and instructions and to provide data for comparing different specifications of the final estimated equation. Participating in the final experiment were six FCC commissioners, nine members of the Commission's congressional oversight committee, and eleven members of the staffs of both groups. Data collected from these experiments have been fitted to theoretical stochastic models of qualitative choice behavior to obtain estimates of allocation preferences as a function of market characteristics. These preference functions are then used (a) to check the coherence of preferences across individuals; (b) to examine differences in policy objectives between congressional oversight committees and the regulatory agency; (c) to determine whether individual preferences can be aggregated into a social decision function with normatively compelling properties, such as consistency with individual preferences or majority-rule equilibrium; and (d) to test the sensitivity of committee decisions to voting institutions and alternative agendas.