The Common Determinants of Legislative and Regulatory Complexity

Dana Foarta and Massimo Morelli
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Massimo Morelli: Bocconi U and IGIER, Bocconi

Research Papers from Stanford University, Graduate School of Business

Abstract: Legislative and regulatory reforms often contain various forms of complexity--multiple contingencies, exemptions and alike. Complexity may be desirable if it better satisfies the needs of political constituencies, and if these benefits are higher than the potential increase in administrative costs. Both benefits and costs are better understood by a reform drafter than by the other players involved in the reform process. This asymmetric information on the costs and benefits of complexity creates incentives for inefficiently complex policies. We show that reform drafters use complexity to pander to persuade their political principals to adopt reforms, when the latter are less informed about the costs consequences of the proposed complexity. Nevertheless, institutional contexts where reform drafters are overseen by political principals are not always leading to greater complexity than in systems without overseers, as long as the drafters face informational constraints regarding the costs and benefits of complexity.

Date: 2022-09
New Economics Papers: this item is included in nep-des, nep-gth, nep-mic and nep-reg
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Working Paper: The Common Determinants of Legislative and Regulatory Complexity (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:4068

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