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Governmental Failures in Evaluating Programs

  • Glazer, Amihai
  • Hassin, Refael

Consider a government that adopts a program, sees a noisy signal about its success, and decides whether to continue the program. Suppose further that the success of a program is greater if people think it will be continued. This paper considers the optimal decision rule for continuing the program, both when government can and cannot commit. We find that welfare can be higher when information is poor, that government should at times commit to continuing a program it believes had failed, and that a government which fears losing power may acquire either too much or too little information.

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Paper provided by University of California Transportation Center in its series University of California Transportation Center, Working Papers with number qt4jd2q25f.

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Date of creation: 01 Jan 1994
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Handle: RePEc:cdl:uctcwp:qt4jd2q25f
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  9. Glazer, Amihai, 1989. "Politics and the Choice of Durability," American Economic Review, American Economic Association, vol. 79(5), pages 1207-13, December.
  10. Border, Kim C & Sobel, Joel, 1987. "Samurai Accountant: A Theory of Auditing and Plunder," Review of Economic Studies, Wiley Blackwell, vol. 54(4), pages 525-40, October.
  11. Reinganum, Jennifer F & Wilde, Louis L, 1988. "A Note on Enforcement Uncertainty and Taxpayer Compliance," The Quarterly Journal of Economics, MIT Press, vol. 103(4), pages 793-98, November.
  12. Harris, Milton & Raviv, Artur, 1979. "Optimal incentive contracts with imperfect information," Journal of Economic Theory, Elsevier, vol. 20(2), pages 231-259, April.
  13. Reinganum, Jennifer F. & Wilde, Louis L., 1985. "Income tax compliance in a principal-agent framework," Journal of Public Economics, Elsevier, vol. 26(1), pages 1-18, February.
  14. Lindsay, Cotton M, 1976. "A Theory of Government Enterprise," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1061-77, October.
  15. Spence, Michael & Zeckhauser, Richard, 1971. "Insurance, Information, and Individual Action," American Economic Review, American Economic Association, vol. 61(2), pages 380-87, May.
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