PhD Lunch Seminars Rotterdam

Speaker(s)
Rei Sayag (EUR)
Date
2012-03-15
Location
Rotterdam

Policy makers need not only decide on which policy to implement when tackling a relevant issue, but also whether to address that issue at all. Using a simple reputational concerns model we explore which policy issues is a policy maker most likely to address and if so, what policy choice is made. Policy makers operate in the presence of naive public, where voters are unaware of differing priors on the desirability of policy choices between themselves and the policy maker. We find that a policy maker is more likely to address a public issue in which the voters believe that little change is needed, but is then likely to opt for a drastic policy shift on that issue even if it not socially optimal. A policy maker is less likely to address an issue in which the voters believe that much change is needed, but is then following a socially optimal policy choice.