The Common Determinants of Legislative and Regulatory Complexity

Legislative and regulatory reforms often contain various forms of complexity – multiple contingencies, exemptions and alike. Complexity may be desirable if it better satisfies the needs of diverse political constituencies and if such a benefit is more important than the potential corresponding increase in implementation or administrative costs. Both benefits and costs are easier to evaluate for the reform drafter than for the other players involved in the reform process. This asymmetric information on the costs and benefits of complexity creates incentives for inefficient complexification of policies. We show that reform drafters use complexity to pander to persuade their political principals to adopt reforms, when the latter are less informed about the costs consequences of the proposed complexity. Nevertheless, institutional contexts where reform drafters are overseen by political principals are not always leading to greater complexity than in systems with a single decision maker who faces the same informational constraints regarding the costs and benefits of complexity.