Good and bad consistency in regulatory decisions

Menezes, Flavio and Roessler, Christian (2008). Good and bad consistency in regulatory decisions. 376, School of Economics, University of Queensland.

Author Menezes, Flavio
Roessler, Christian
Title Good and bad consistency in regulatory decisions
School, Department or Centre School of Economics
Institution University of Queensland
Report Number 376
Publication date 2008
Language eng
Abstract/Summary We examine sources of consistent regulatory decisions in a model where regulators respond to mixed incentives, including career concerns. In the reference case, regulators act as "public servants" who strive to make the socially optimal decision, given limited information and the opportunity to observe the prior decision of another regulator. Adding career concerns, such as a desire to avoid controversy or to implement a future employer’s preferred policy, tends to reduce the degree of differentiation in sequentially taken decisions, hence increasing consistency. Thus, it is possible to observe that the self-interested career concerns of regulators give rise to consistency in regulatory decision-making. This type of consistency might lead to substantial deviations from optimal regulatory policies.
Additional Notes

Document type: Working Paper
Collection: School of Economics Publications
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Created: Fri, 27 Feb 2015, 14:20:44 EST by Tammy Crealy on behalf of School of Economics