Why Do Policy Makers Stick to Inefficient Decisions?

Robert Dur ()

Public Economics from EconWPA

Abstract: This paper offers an explanation for why policy makers stick to inefficient policy decisions. I argue that repealing a policy is a bad signal to voters about the policy maker's competence if voters do not have complete knowledge about the effects of implemented policies. I derive the optimal policy maker's decision on continuation of a policy, assuming that voters' beliefs about the policy maker's competence are updated according to Bayes' rule. I show that if the policy maker cares sufficiently about reelection, he will never repeal a policy.

Keywords: reputation; elections; policy reversal (search for similar items in EconPapers)
JEL-codes: D72 D78 (search for similar items in EconPapers)
Date: 1999-06-18
Note: Type of Document - ; pages: 21; figures: none.
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Related works:
Working Paper: Why do Policy Makers stick to Inefficient Decisions? (1999)
Journal Article: Why Do Policy Makers Stick to Inefficient Decisions? (2001)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:9906002

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