Regulation with Experimentation: Ex Ante Approval, Ex Post Withdrawal, and Liability

• 成果类型: Article
• 署名作者: Henry, Emeric; Loseto, Marco; Ottaviani, Marco
• 署名单位: Institut d'Etudes Politiques Paris (Sciences Po); Centre for Economic Policy Research - UK; University of Chicago; Bocconi University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.4164
• 发表日期: 2022
• 页码: 5330-5347
• 关键词: authorization regulation; liability; Withdrawal; experimentation; preemption doctrine

摘要

We analyze the optimal mix of ex ante experimentation and ex post learning for the dynamic adoption of activities with uncertain payoffs in a two-phase model of information diffusion. In a first preintroduction phase, costly experimentation is undertaken to decide whether to adopt an activity or abandon experimentation. In a second stage following adoption, learning can continue possibly at a different pace while the activity remains in place; the withdrawal option is exercised following the accumulation of sufficiently bad news. We compare from a law and economics perspective the performance of three regulatory frameworks commonly adopted to govern private experimentation and adoption incentives: liability, withdrawal, and authorization regulation. Liability should be preempted to avoid chilling of activities that generate large positive externalities consistent with the preemption doctrine. Liability should be used to discourage excessive experimentation for activities that generate small positive externalities. Authorization regulation should be lenient whenever it is used consistent with the organization of regulation in a number of areas, ranging from product safety to antitrust.