Policy persistence, risk estimation and policy underreaction

Moshe Maor ()

Policy Sciences, 2014, vol. 47, issue 4, 425-443

Abstract: In recent years, there has been remarkable progress in our understanding of policy persistence, on the one hand, and of the psychological phenomenon of underreaction, on the other. Surprisingly, there has been no attempt to use robust findings, derived from these efforts, in order to understand the nuances of policy underreaction. Policy underreaction refers to systematically slow and/or insufficient response by policymakers to increased risk or opportunity, or no response at all. This article tries to give the concept of policy underreaction a robust analytical identity by integrating cognitive, social, psychological and emotional variables in the explanation of policy underreaction and by introducing a variation across different types of contextual sources of policy persistence as explanatory variables of this phenomenon. It develops an analytical framework that revolves around two key elements of decision making in situations of risk unfolding over time: (1) policymakers’ underestimation and accurate estimation of increased risks and (2) intra- and extra-organizational sources of policy persistence. Based on these dimensions, the article identifies and illustrates four distinct modes of policy underreaction which reflect differences in the nature of implemented policy. Copyright Springer Science+Business Media New York 2014

Keywords: Policy underreaction; Risk underestimation; Policy persistence; Warnings; No action; Bounded rationality (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11077-014-9203-8 (text/html)
Access to full text is restricted to subscribers.

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:kap:policy:v:47:y:2014:i:4:p:425-443

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11077/PS2

DOI: 10.1007/s11077-014-9203-8

Access Statistics for this article

Policy Sciences is currently edited by Michael Howlett

More articles in Policy Sciences from Springer, Society of Policy Sciences
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().