Policy Experimentation with Repeated Elections

42 Pages Posted: 12 May 2018 Last revised: 1 Mar 2019

See all articles by Ilwoo Hwang

Ilwoo Hwang

University of Miami - School of Business Administration - Department of Economics

Date Written: December 31, 2018

Abstract

When does an incentive exist for an incumbent to experiment with a risky reform policy in the presence of future elections? To address this question, we study a dynamic game between two political parties with heterogeneous preferences and a voter. The voter elects a party that then chooses a policy from among a safe alternative with known payoffs and two risky ones with initially unknown expected payoffs. We show that under infrequent elections, the incumbent party experiments with its preferred reform policy even if its outlook is not promising, whereas with overly frequent elections, the incumbent stops experimentation prematurely because an imminent election increases the potential to lose power if he undertakes risky reform. While infrequent elections are not ideal for the voter, the degree of inefficiency from overly frequent elections is large enough that voters are worse than under a dictatorship. Efficiency can be restored by combining frequent elections with a voter’s strategy that advantages the incumbent party.

Keywords: election, strategic experimentation, political agency, learning, incumbency advantage

JEL Classification: C73, D72, D83

Suggested Citation

Hwang, Ilwoo, Policy Experimentation with Repeated Elections (December 31, 2018). University of Miami Business School Research Paper No. 3171239, Available at SSRN: https://ssrn.com/abstract=3171239 or http://dx.doi.org/10.2139/ssrn.3171239

Ilwoo Hwang (Contact Author)

University of Miami - School of Business Administration - Department of Economics ( email )

P.O. Box 248126
Coral Gables, FL 33124-6550
United States

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