Why Do Policy Makers Stick to Inefficient Decisions?

Robert Dur

Public Choice, 2001, vol. 107, issue 3-4, 34 pages

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. Copyright 2001 by Kluwer Academic Publishers

Date: 2001
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Related works:
Working Paper: Why do Policy Makers stick to Inefficient Decisions? (1999)
Working Paper: Why Do Policy Makers Stick to Inefficient Decisions? (1999)
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