Policy Experimentation in Committees: A Case against Veto Rights under Redistributive Constraints

Vincent Anesi and T. Renee Bowen

American Economic Journal: Microeconomics, 2021, vol. 13, issue 3, 124-62

Abstract: We study optimal policy experimentation by a committee. We consider a dynamic bargaining game in which committee members choose either a risky reform or a safe alternative each period. When no redistribution is allowed, the unique equilibrium outcome is generically inefficient. When redistribution is allowed (even small amounts), there always exists an equilibrium that supports optimal experimentation for any voting rule without veto players. With veto players, however, optimal policy experimentation is possible only with a sufficient amount of redistribution. We conclude that veto rights are more of an obstacle to optimal policy experimentation than are the constraints on redistribution themselves.

JEL-codes: C78 D71 D72 D78 H23 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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DOI: 10.1257/mic.20190023

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