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The Open Method of Coordination (OMC) as an Evolutionary Learning Process

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Author Info
Ania, Ana B.
Wagener, Andreas

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Abstract

We interpret the Open Method of Coordination (OMC), recently adopted by the EU as a mode of governance in the area of social policy and other fields, as an imitative learning dynamics of the type considered in evolutionary game theory. The best-practise feature and the iterative design of the OMC correspond to the behavioral rule ``imitate the best.'' In a redistribution game with utilitarian governments and mobile welfare beneficiaries, we compare the outcomes of imitative behavior (long-run evolutionary equilibrium), decentralized best-response behavior (Nash equilibrium), and coordinated policies. The main result is that the OMC allows policy coordination on a strict subset of the set of Nash equilibria, favoring in particular coordination on {\em intermediate} values of the policy instrument.

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Paper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 10332.

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Date of creation: 18 Mar 2009
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Handle: RePEc:lmu:muenec:10332

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Related research
Keywords: Open Method of Coordination; Finite-population Evolutionarily Stable Strategy; Imitation; Mobility; Redistribution.;

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Find related papers by JEL classification:
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Health, Education, and Welfare
C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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  2. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2004. "Yardstick competition in intergovernmental relationships: theory and empirical predictions," Economics Letters, Elsevier, vol. 83(3), pages 325-333, June. [Downloadable!] (restricted)
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  4. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January. [Downloadable!] (restricted)
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  5. Kolmar, Martin, 2007. "Beveridge versus Bismarck public-pension systems in integrated markets," Regional Science and Urban Economics, Elsevier, vol. 37(6), pages 649-669, November. [Downloadable!] (restricted)
  6. Cremer, Helmuth & Pestieau, Pierre, 2004. "Factor mobility and redistribution," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 57, pages 2529-2560 Elsevier. [Downloadable!] (restricted)
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  8. Samuelson Larry, 1994. "Stochastic Stability in Games with Alternative Best Replies," Journal of Economic Theory, Elsevier, vol. 64(1), pages 35-65, October. [Downloadable!] (restricted)
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  10. Mansoorian, Arman & Myers, Gordon M., 1997. "On the consequences of government objectives for economies with mobile populations," Journal of Public Economics, Elsevier, vol. 63(2), pages 265-281, January. [Downloadable!] (restricted)
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  11. Martina Eckardt, 2003. "The Open Method of Co-ordination on Pensions - An Economic Analysis of its Effects on Pension Reforms," Thuenen-Series of Applied Economic Theory 39, University of Rostock, Institute of Economics, Germany. [Downloadable!]
  12. Cremer, Helmuth & Pestieau, Pierre, 2003. "Social insurance competition between Bismarck and Beveridge," Journal of Urban Economics, Elsevier, vol. 54(1), pages 181-196, July. [Downloadable!] (restricted)
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  13. Tanaka, Yasuhito, 2000. "A finite population ESS and a long run equilibrium in an n players coordination game," Mathematical Social Sciences, Elsevier, vol. 39(2), pages 195-206, March. [Downloadable!] (restricted)
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