Presentation held at the ECPR Standing Group on Regulatory Governance Biennial Conference in Lausanne from 4 to 6 July 2018.

1. Stephan Grimmelikhuijsen
Utrecht University School of Governance
Feie Herkes
Utrecht University School of Governance
Femke de Vries
University of Groningen
Decision transparency increases public trust in oversight agencies1
Decision transparency increases
public trust in health, education and
financial oversight agencies.
A survey experiment.
Ian Leistikow
Dutch Health & Youth Care Inspectorate /
Erasmus University Rotterdam
Jos Verkroost
Dutch Education Inspectorate
Wilte Zijlstra
Dutch Authority for the Financial Markets (AFM)
Wilte.Zijlstra@afm.nl5 July 2018

2. 5 July 2018Decision transparency increases public trust in oversight agencies2
Twin peaks
InsurersBanks
DNB
AFM
Financial
Advisors
Stock MarketPension-
funds
Conduct supervision
Conduct and information provision
of market participants
Prudential supervision;
solidity financial institutions &
stability system

3. 5 July 2018Decision transparency increases public trust in oversight agencies3
Level playing field

4. 5 July 2018Decision transparency increases public trust in oversight agencies
Mission
The AFM is committed to
promoting fair and transparent
financial markets.
As an independent market
conduct authority, we contribute
to a sustainable financial
system and prosperity in the
Netherlands.
4

5. “the market”
5 July 2018Decision transparency increases public trust in oversight agencies5
Citizen
(Customer / Student / Patient)
Regulator
(AFM / Educ Insp / Health Insp)
Organization
(Bank / School / Hospital)

6. “the market”
5 July 2018Decision transparency increases public trust in oversight agencies6
Citizen
(Customer / Student / Patient)
Regulator
(AFM / Educ Insp / Health Insp)
Organization
(Bank / School / Hospital)
Has to balance interests of
citizens & organizations

7. “the market”
5 July 2018Decision transparency increases public trust in oversight agencies7
Citizen
(Customer / Student / Patient)
Regulator
(AFM / Educ Insp / Health Insp)
Organization
(Bank / School / Hospital)
Has to balance interests of
citizens & organizations
Effect communication about
on public trust in

8. “the market”
5 July 2018Decision transparency increases public trust in oversight agencies8
Citizen
(Customer / Student / Patient)
Regulator
(AFM / Educ Insp / Health Insp)
Organization
(Bank / School / Hospital)
Has to balance interests of
citizens & organizations
Effect communication about
on public trust in
Does transparency of a decision trade-off
influence public trust in regulatory oversight agencies?

9. Transparant about
• Rationale (Why?)
• Process (How?)
5 July 2018Decision transparency increases public trust in oversight agencies9

10. Transparency increasing trust?
• Transparency → Legitimacy↓
o De Fine Licht 2014 [culture and leisure, traffic security]
• Transparency → Trust↑
o Porumbescu & Grimmelikhuijsen, 2017 [government]
• Rationale transparency → decision acceptance/Trust ↑
Process transparency → decision acceptance/Trust =
o De Fine Licht et al, 2014 [schools]
• Rationale transparency > Process transparency
Content did not matter
o De Vries et al., 2017 [regulator; AFM]
• Mixed results at best
o Grimmelikhuijsen et al., 2017 [government]
5 July 2018Decision transparency increases public trust in oversight agencies10

11. Hypotheses
1. Transparancy ↑ = trust ↑
2. Rationale transparency > Process transparency
(Why > How)
5 July 2018Decision transparency increases public trust in oversight agencies11

12. Measuring Trust
• perceived competence: the extent to which a citizen
perceives the regulatory agency to be capable, effective,
skillful, and professional (3 questions)
• perceived benevolence: the extent to which a citizen
perceives the regulatory agency to care about the welfare
of the public and to be motivated to act in the public
interest (3 questions)
• perceived integrity: the extent to which a citizen perceives
the regulatory agency to be sincere, to tell the truth, and to
fulfill its promises (3 questions)
5 July 2018Decision transparency increases public trust in oversight agencies12

13. Experimental set-up
5 July 2018Decision transparency increases public trust in oversight agencies13
Financial regulator (AFM) N=500
decision: sanction
D D D D
P
RR
P
C
decision acceptance decision acceptance decision acceptance
decision acceptance decision acceptance decision acceptance
trust trust trust
decision: 2nd chance
Education Inspectorate N=500 Health Care Inspectorate N=500
background
C Cdecision: 2nd chance decision: 2nd chance
General knowledge financial markets / education / health care, & supervisors; N=1500
decision: sanction
D D D D
P
RR
P
decision: sanction
D D D D
P
RR
P

14. Decision acceptance
5 July 2018Decision transparency increases public trust in oversight agencies14

15. Trust
5-point scale, based on 9 questions
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1
2
3
4
5
AFM EducInsp HealthInsp
C D DR DP DPR
high
low

16. Effects on trust
5 July 2018Decision transparency increases public trust in oversight agencies16

17. Post-hoc:
trust vs decision acceptance
5 July 2018Decision transparency increases public trust in oversight agencies17

18. Conclusions
• Transparency increases trust in regulatory agency
• Type of transparency (rationale and/or process) no
effect
o But post-hoc: positive effect on people who
disagreed with decision
o Constraints & effect of manipulation
• (post-hoc & literature): use rationale transparency
5 July 2018Decision transparency increases public trust in oversight agencies18

19. Wilte.Zijlstra@afm.nl
Twitter @Wilte
5 July 2018Decision transparency increases public trust in oversight agencies19