Policy Persistence and Drift in Organizations

German Gieczewski

Econometrica, 2021, vol. 89, issue 1, 251-279

Abstract: This paper models the evolution of organizations that allow free entry and exit of members, such as cities and trade unions. In each period, current members choose a policy for the organization. Policy changes attract newcomers and drive away dissatisfied members, altering the set of future policymakers. The resulting feedback effects take the organization down a “slippery slope” that converges to a myopically stable policy, even if the agents are forward‐looking, but convergence becomes slower the more patient they are. The model yields a tractable characterization of the steady state and the transition dynamics. The analysis is also extended to situations in which the organization can exclude members, such as enfranchisement and immigration.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:wly:emetrp:v:89:y:2021:i:1:p:251-279

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