Why do Policy Makers stick to Inefficient Decisions?
1999-06-30
Research Paper
This publication is part of collection
| Related Files |
|---|
View PDF Version
(1999-0501.pdf, 0.4MB) |
This paper offers an explanation for why policy makers stick to inefficient policy decisions. I argue that repealing a policy is a bad signal to voters about the policy maker's competence if voters do not have complete knowledge about the effects of implemented policies. I derive the optimal policy maker's decision on continuation of a policy, assuming that voters' beliefs about the policy maker's competence are updated according to Bayes' rule. I show that if the policy maker cares sufficiently about reelection, he will never repeal a policy.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- D78 : Positive Analysis of Policy-Making and Implementation
- D72 : Economic Models of Political Processes: Rent-Seeking, Elections, Legislatures, and Voting Behavior
Automatically Extracted Terms
- policy
- voter
- policy maker
- maker
- strategy
- period
- policy makers competence
- probability
- decision
- failure
- belief
- signal
- effect
- competence
- success
- policy makers
- equilibrium
- repeal
- period 1
- reelection
