Reform Fatigue

T. Renee Bowen, Jackie M. L. Chan, Oeindrila Dube and Nicolas Lambert
Additional contact information
Jackie M. L. Chan: Chinese University of Hong Kong
Oeindrila Dube: NYU

Research Papers from Stanford University, Graduate School of Business

Abstract: We present a rational theory of reform fatigue. At each instant a politician chooses to divide effort between reforms and the status quo, and this choice is modeled as a two-armed bandit problem. Reforms are expected to yield a higher rate of output to the voter than the status quo conditional on the politician being competent. We interpret competence as the administrative ability to ensure successful implementation of reforms. The politician's competence is therefore unknown ex-ante to both the politician and the voter. In addition the voter is unable to observe the politician's effort on reform, but only observes aggregate output. In equilibrium the voter gives the politician endogenous term lengths that depend on the timing of success. The executive experiments with reforms at the beginning of his first term, but gradually decreases the rate of reforms in the absence of early success. We call this gradual reduction in experimentation reform fatigue. The theory thus predicts that reform fatigue follows a political cycle. We provide empirical evidence of reform fatigue cycles in financial policies among presidential countries.

Date: 2016-03
New Economics Papers: this item is included in nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/410256
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/410256 [301 Moved Permanently]--> https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/410256)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:3394

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().