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Reputation-concerned policy makers and institutional status quo bias

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  • Fu, Qiang
  • Li, Ming

Abstract

We study the policy choice of an office-holding politician who is concerned with the public's perception of his capabilities. The politician decides whether to maintain the status quo or to conduct a risky reform. The reform's success depends critically on the politician's capabilities, which are privately known to the politician. The public observes both his policy choice and the outcome of the reform, and assesses his competence. We show that the politician may engage in socially detrimental reform in order to be perceived as more capable. We investigate the institutional remedy that balances the gains and costs when the policy maker is subject to reputation concerns. Conservative institutions that thwart beneficial reform may potentially improve social welfare.

Suggested Citation

  • Fu, Qiang & Li, Ming, 2014. "Reputation-concerned policy makers and institutional status quo bias," Journal of Public Economics, Elsevier, vol. 110(C), pages 15-25.
  • Handle: RePEc:eee:pubeco:v:110:y:2014:i:c:p:15-25
    DOI: 10.1016/j.jpubeco.2013.11.008
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    Cited by:

    1. Chen, Chia-Hui & Ishida, Junichiro, 2015. "Careerist experts and political incorrectness," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 1-18.
    2. Alonso, Ricardo & Câmara, Odilon, 2016. "Political disagreement and information in elections," Games and Economic Behavior, Elsevier, vol. 100(C), pages 390-412.
    3. Cassette, Aurélie & Farvaque, Etienne, 2016. "A dirty deed done dirt cheap: Reporting the blame of a national reform on local politicians," European Journal of Political Economy, Elsevier, vol. 43(C), pages 127-144.
    4. Elisabeth Schulte & Mike Felgenhauer, 2017. "Preselection and expert advice," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(3), pages 693-714, August.
    5. repec:eee:jeborg:v:137:y:2017:i:c:p:37-53 is not listed on IDEAS
    6. Prato, Carlo & Wolton, Stephane, 2013. "Rational Ignorance, Elections, and Reform," MPRA Paper 68638, University Library of Munich, Germany, revised 10 Dec 2015.

    More about this item

    Keywords

    Reform; Reputation; Ability; Conservatism;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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