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Preemptive Policy Experimentation

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  • Steven Callander
  • Patrick Hummel

Abstract

We develop a model of experimentation and learning in policymaking when control of power is temporary. We demonstrate how an early office holder who would otherwise not experiment is nonetheless induced to experiment when his hold on power is temporary. This preemptive policy experiment is profitable for the early office holder as it reveals information about the policy mapping to his successor, information that shapes future policy choices. Thus policy choices today can cast a long shadow over future choices purely through information transmission and absent any formal institutional constraints or real state variables. The model we develop utilizes a recent innovation that represents the policy mapping as the realized path of a Brownian motion. We provide a precise characterization of when preemptive experimentation emerges in equilibrium and the form it takes. We apply the model to several well known episodes of policymaking, reinterpreting the policy choices as preemptive experiments.

Suggested Citation

  • Steven Callander & Patrick Hummel, 2014. "Preemptive Policy Experimentation," Econometrica, Econometric Society, vol. 82(4), pages 1509-1528, July.
    • Handle: RePEc:wly:emetrp:v:82:y:2014:i:4:p:1509-1528
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    File URL: http://hdl.handle.net/10.1111/ecta.2014.82.issue-4.x
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    Cited by:

    1. Ying Chen & Hülya Eraslan, 2017. "Dynamic Agenda Setting," American Economic Journal: Microeconomics, American Economic Association, vol. 9(2), pages 1-32, May.
    2. Andreas Bernecker & Pierre C. Boyer & Christina Gathmann, 2021. "The Role of Electoral Incentives for Policy Innovation: Evidence from the US Welfare Reform," American Economic Journal: Economic Policy, American Economic Association, vol. 13(2), pages 26-57, May.
    3. Doruk Cetemen & Can Urgun & Leeat Yariv, 2023. "Collective Progress: Dynamics of Exit Waves," Journal of Political Economy, University of Chicago Press, vol. 131(9), pages 2402-2450.
    4. Bowen, Renee & Hwang, Ilwoo & Krasa, Stefan, 2022. "Personal power dynamics in bargaining," Journal of Economic Theory, Elsevier, vol. 205(C).
    5. Alonso, Ricardo & Câmara, Odilon, 2016. "Political disagreement and information in elections," Games and Economic Behavior, Elsevier, vol. 100(C), pages 390-412.
    6. Anand, Kartik & Gai, Prasanna & König, Philipp J., 2023. "Leaping into the dark: A model of policy gambles," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 457-476.
    7. Andina-Díaz, Ascensión & Feri, Francesco & Meléndez-Jiménez, Miguel A., 2021. "Institutional flexibility, political alternation, and middle-of-the-road policies," Journal of Public Economics, Elsevier, vol. 204(C).
    8. Freer, Mikhail & Martinelli, César & Wang, Siyu, 2020. "Collective experimentation: A laboratory study," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 365-379.
    9. Antony Millner & Hélène Ollivier, 2016. "Beliefs, Politics, and Environmental Policy," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(2), pages 226-244.
    10. Alexandre B Cunha & Emanuel Ornelas, 2018. "The Limits of Political Compromise: Debt Ceilings and Political Turnover," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 781-824.
    11. Howell, William & Shepsle, Kenneth & Wolton, Stephane, 2020. "Executive Absolutism: A Model," MPRA Paper 98221, University Library of Munich, Germany.
    12. Binswanger, Johannes & Oechslin, Manuel, 2020. "Better statistics, better economic policies?," European Economic Review, Elsevier, vol. 130(C).
    13. Sean Gailmard, 2020. "Game theory and the study of American political development," Public Choice, Springer, vol. 185(3), pages 335-357, December.
    14. Robert Dur & Arjan Non & Paul Prottung & Benedetta Ricci, 2023. "Who’s Afraid of Policy Experiments?," Tinbergen Institute Discussion Papers 23-027/V, Tinbergen Institute.
    15. Fei Li & Jidong Zhou, 2020. "A Model of Crisis Management," Cowles Foundation Discussion Papers 2266, Cowles Foundation for Research in Economics, Yale University.
    16. Xie, Yinxi & Xie, Yang, 2017. "Machiavellian experimentation," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 685-711.
    17. Ginzburg, Boris, 2022. "Collective Learning and Distributive Uncertainty," MPRA Paper 112780, University Library of Munich, Germany.

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