Policy experimentation, political competition, and heterogeneous beliefs

• 成果类型: Article
• 署名作者: Millner, Antony; Ollivier, Helene; Simon, Leo
• 署名单位: University of London; London School Economics & Political Science; Centre National de la Recherche Scientifique (CNRS); Paris School of Economics; University of California System; University of California Berkeley; Swiss Federal Institutes of Technology Domain; ETH Zurich
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2014.08.008
• 发表日期: 2014
• 页码: 84-96
• 关键词: beliefs; learning; political economy

摘要

We consider a two period model in which an incumbent political party chooses the level of a current policy variable unilaterally, but faces competition from a political opponent in the future. Both parties care about voters' payoffs, but they have different beliefs about how policy choices will map into future economic outcomes. We show that when the incumbent party can endogenously influence whether learning occurs through its policy choices (policy experimentation), future political competition gives it a new incentive to distort its policies it manipulates them so as to reduce uncertainty and disagreement in the future, thus avoiding facing competitive elections with an opponent very different from itself. The model thus demonstrates that all incumbents can find it optimal to 'over experiment', relative to a counterfactual in which they are sure to be in power in both periods. We thus identify an incentive for strategic policy manipulation that does not depend on parties having conflicting objectives, but rather stems from their differing beliefs about the consequences of their actions. (C) 2014 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/3.0/).