Model uncertainty and the rationality of economic policy

Jan Schnellenbach

Journal of Evolutionary Economics, 2004, vol. 15, issue 1, 116 pages

Abstract: This paper examines the process of economic policy-making under conditions of model uncertainty. A median voter model is introduced in which the electorate is uncertain of the policy measures available as well as their respective outcomes and opinion formation is a social process of communication and contagion. Learning from experience is also considered. It is shown that economic policy-making under uncertainty produces novel policy routines, but that a mechanism of efficiently utilising the generated knowledge is missing. Copyright Springer-Verlag Berlin/Heidelberg 2004

Keywords: Economic policy; Model uncertainty; Collective beliefs; Collective learning (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:spr:joevec:v:15:y:2004:i:1:p:101-116

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DOI: 10.1007/s00191-004-0231-y

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