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Why Do Policy Makers Stick to Inefficient Decisions?

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Author Info

  • Robert A.J. Dur

    (Tinbergen Institute, Erasmus University Rotterdam)

Abstract

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.

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File URL: http://128.118.178.162/eps/pe/papers/9906/9906002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 9906002.

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Length: 21 pages
Date of creation: 18 Jun 1999
Date of revision:
Handle: RePEc:wpa:wuwppe:9906002

Note: Type of Document - ; pages: 21; figures: none.
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Web page: http://128.118.178.162

Related research

Keywords: reputation; elections; policy reversal;

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References

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  1. Wirl, Franz, 1991. " The Political Economics of Wackersdorf: Why Do Politicians Stick to Their Past Decisions?," Public Choice, Springer, vol. 70(3), pages 343-50, June.
  2. Howitt, Peter & Wintrobe, Ronald, 1995. "The political economy of inaction," Journal of Public Economics, Elsevier, vol. 56(3), pages 329-353, March.
  3. Alesina, Alberto & Drazen, Allan, 1991. "Why Are Stabilizations Delayed?," American Economic Review, American Economic Association, vol. 81(5), pages 1170-88, December.
  4. Amihai Glazer & Bernard Grofman, 1989. "Why representatives are ideologists though voters are not," Public Choice, Springer, vol. 61(1), pages 29-39, April.
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Citations

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Cited by:
  1. Amihai Glazer, 2012. "Handicaps on Timing to Improve Reputation," Working Papers 111210, University of California-Irvine, Department of Economics.
  2. Mitja Cok & Polona Domadenik & Tjasa Redek & Miroslav Verbic, 2009. "Labour market reforms in the context of political power theory: The case of Slovenia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 27(1), pages 57-82.
  3. Klaas J. Beniers & Robert Dur, 2004. "Politicians' Motivation, Political Culture, and Electoral Competition," Tinbergen Institute Discussion Papers 04-065/1, Tinbergen Institute, revised 16 Aug 2005.
  4. FU, Qiang & LI, Ming, 2010. "Policy Making with Reputation Concerns," Cahiers de recherche 09-2010, Centre interuniversitaire de recherche en Ă©conomie quantitative, CIREQ.
  5. Klaas J. Beniers, 2005. "Party Governance and the Selection of Parliamentarians," Tinbergen Institute Discussion Papers 05-080/1, Tinbergen Institute.
  6. Louis Jaeck, 2011. "Information and political failures: to what extent does rational ignorance explain irrational beliefs formation?," Constitutional Political Economy, Springer, vol. 22(3), pages 287-301, September.
  7. Yoh, Allison & Taylor, Brian D. & Gahbauer, John, 2012. "Does Transit Mean Business? Reconciling academic, organizational, and political perspectives on Reforming Transit Fare Policies," University of California Transportation Center, Working Papers qt6dv295b7, University of California Transportation Center.
  8. Pitlik, Hans & Wirth, Steffen, 2003. "Do crises promote the extent of economic liberalization?: an empirical test," European Journal of Political Economy, Elsevier, vol. 19(3), pages 565-581, September.
  9. Klaas J. Beniers, 2005. "Party Governance and the Selection of Parliamentarians," Tinbergen Institute Discussion Papers 05-080/1, Tinbergen Institute.

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