Difference between revisions of "Fernandez Rodrik (1991) - Resistance To Reform Status Quo Bias In The Presence Of Individual Specific Uncertainty"
imported>Ed (New page: ==Reference(s)== Fernandez, R. and D. Rodrik (1991), Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty, American Economic Review 81, 1146-1155. [http...) |
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==Reference(s)== | ==Reference(s)== | ||
Fernandez, R. and D. Rodrik (1991), Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty, American Economic Review 81, 1146-1155. [http://www.edegan.com/pdfs/Fernandez%20Rodrik%20(1991)%20-%20Resistance%20to%20Reform%20Status%20Quo%20Bias%20in%20the%20Presence%20of%20Individual%20Specific%20Uncertainty.pdf pdf] | Fernandez, R. and D. Rodrik (1991), Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty, American Economic Review 81, 1146-1155. [http://www.edegan.com/pdfs/Fernandez%20Rodrik%20(1991)%20-%20Resistance%20to%20Reform%20Status%20Quo%20Bias%20in%20the%20Presence%20of%20Individual%20Specific%20Uncertainty.pdf pdf] | ||
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==Abstract== | ==Abstract== | ||
Why do governments so often fail to adopt policies which economists consider to be efficiency-enhancing? Our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform. We show that there is a bias towards the status quo (and hence against efficiency-enhancing reforms) whenever some of the individual gainers and losers from reform cannot be identified beforehand. There are reforms which, once adopted, will receive adequate political support but would have failed to carry the day ex ante. The argument does not rely on risk aversion, irrationality, or hysteresis due to sunk costs. | Why do governments so often fail to adopt policies which economists consider to be efficiency-enhancing? Our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform. We show that there is a bias towards the status quo (and hence against efficiency-enhancing reforms) whenever some of the individual gainers and losers from reform cannot be identified beforehand. There are reforms which, once adopted, will receive adequate political support but would have failed to carry the day ex ante. The argument does not rely on risk aversion, irrationality, or hysteresis due to sunk costs. | ||
Revision as of 17:32, 26 May 2010
- This page is referenced in BPP Field Exam Papers
Reference(s)
Fernandez, R. and D. Rodrik (1991), Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty, American Economic Review 81, 1146-1155. pdf
Abstract
Why do governments so often fail to adopt policies which economists consider to be efficiency-enhancing? Our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform. We show that there is a bias towards the status quo (and hence against efficiency-enhancing reforms) whenever some of the individual gainers and losers from reform cannot be identified beforehand. There are reforms which, once adopted, will receive adequate political support but would have failed to carry the day ex ante. The argument does not rely on risk aversion, irrationality, or hysteresis due to sunk costs.
