Herding Among Bureaucrats
44 Pages Posted: 16 Jun 2012 Last revised: 21 Nov 2013
Date Written: June 8, 2013
Abstract
The herding of expert opinions is often rationalized as the outcome of social learning. However, experts are typically individuals with career concerns. As a result, herding can also arise from the fear of opposing consensus opinion and the potential career consequences of being wrong. We empirically test for social learning and career concerns using novel data on bureaucrats’ expert opinions over whether to publicly provide health insurance for pharmaceuticals. We find robust evidence that career concerns are an important source of herd behavior in these policy choices. Our findings have implications for the delegation of policy-making to experts.
Keywords: Experts, Social learning, Career Concerns, Bureaucrats, Pharmaceuticals
JEL Classification: D80, H77, I18
Suggested Citation: Suggested Citation
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