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A view from behavioral political economy on China's institutional change

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  • Zhang, Yongjing

Abstract

A behavioral political economy framework is built on the basis of prospect theory to explain the induced and imposed institutional changes during China's market reform, giving special attention to the integrated effects of economic and political institutions. According to prospect theory, how rulers frame their decisions — in the prospects of gains or losses, influences how much risk they will take. China's market reform has been largely framed in the prospects of economic gains, for which the continuously growing private sector is the driving force. China's central government adopts a growth-oriented incremental reform that coincides with the prediction of prospect theory.

Suggested Citation

  • Zhang, Yongjing, 2012. "A view from behavioral political economy on China's institutional change," China Economic Review, Elsevier, vol. 23(4), pages 991-1002.
  • Handle: RePEc:eee:chieco:v:23:y:2012:i:4:p:991-1002
    DOI: 10.1016/j.chieco.2012.05.002
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    References listed on IDEAS

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    Cited by:

    1. repec:elg:eechap:15325_22 is not listed on IDEAS
    2. repec:rfe:zbefri:v:35:y:2017:i:2:p:375-390 is not listed on IDEAS

    More about this item

    Keywords

    Behavioral economics; China; Incremental reform; Institutional change; Political economy;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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