Why do Policy Makers stick to Inefficient Decisions?
AbstractThis 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.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 99-050/1.
Date of creation: 01 Jul 1999
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Other versions of this item:
- Dur, Robert A J, 2001. " Why Do Policy Makers Stick to Inefficient Decisions?," Public Choice, Springer, vol. 107(3-4), pages 221-34, June.
- Robert A.J. Dur, 1999. "Why Do Policy Makers Stick to Inefficient Decisions?," Public Economics 9906002, EconWPA.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-08-27 (All new papers)
- NEP-CDM-1999-08-27 (Collective Decision-Making)
- NEP-MIC-1999-08-27 (Microeconomics)
- NEP-PBE-1999-08-28 (Public Economics)
- NEP-POL-1999-08-27 (Positive Political Economics)
- NEP-PUB-1999-08-27 (Public Finance)
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