Resistance to Reform: Reconsidering the Role of Individual-Specific Uncertainty

Universitat Pompeu Fabra Working Paper No. 537

21 Pages Posted: 19 Jun 2001

See all articles by Antonio Ciccone

Antonio Ciccone

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Abstract

Individual-specific uncertainty may increase the chances of reform being enacted and sustained. Reform may be more likely to be enacted because a majority of agents might end up losing little from reform and a minority gaining a lot. Under certainty, reform would therefore be rejected, but it may be enacted with uncertainty because those who end up losing believe that they might be among the winners. Reform may be more likely to be sustained because, in a realistic setting, reform will increase the incentives of agents to move into those economic activities that benefit. Agents who respond to these incentives will vote to sustain reform in future elections, even if they would have rejected reform under certainty. These points are made using the trade-model of Fernandez and Rodrik (AER, 1991).

Keywords: Status-quo bias, bias against reform, individual-specific uncertainty

JEL Classification: D72, D74, D81

Suggested Citation

Ciccone, Antonio, Resistance to Reform: Reconsidering the Role of Individual-Specific Uncertainty. Universitat Pompeu Fabra Working Paper No. 537. Available at SSRN: https://ssrn.com/abstract=273424 or http://dx.doi.org/10.2139/ssrn.273424

Antonio Ciccone (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
+34 93 542 1669 (Phone)
+34 93 542 1746 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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