Why Do Policy Makers Stick to Inefficient Decisions?
نویسنده
چکیده
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 makers competence if voters do not have complete knowledge about the effects of implemented policies. I derive the optimal policy makers decision on continuation of a policy, assuming that voters beliefs about the policy makers competence are updated according to Bayes rule. I show that if the policy maker cares sufficiently about reelection, he will never repeal a policy.
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