Evolution, uncertainty, and the asymptotic efficiency of policy

Brian Albrecht, Joshua Hendrickson () and Alexander William Salter
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Alexander William Salter: Rawls College of Business, Texas Tech University

Public Choice, 2022, vol. 192, issue 1, No 9, 169-188

Abstract: Abstract Politics, like any social system, involves selection mechanisms. This paper presents a model of politics as an evolutionary process. Our model yields three main results. First, the political process selects for efficient policies in the long run. We call that attribute asymptotic efficiency. Second, bargaining amongst interest groups bounds the inefficiencies that can exist in the short run. Potential inefficiency declines when organizing interest groups becomes less costly. Finally, policies that appear to be inefficient in a static analysis can be efficient once economists consider the dynamic nature of political decisions. We argue that viewing the political process as a selection mechanism allows political economists to use efficiency as a criterion for positive economic analysis. In our approach, applied political economy involves looking for relevant costs that make the policy efficient. However, our approach does not rob political economists of the ability to make meaningful normative statements; it only constrains the type of statements made.

Keywords: Real options; Political Coase theorem; Evolution; Efficiency; Alchian (search for similar items in EconPapers)
JEL-codes: D70 D72 P16 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11127-022-00978-2

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