Unintended Consequences: Ambiguity Neglect and Policy Ineffectiveness

18 Pages Posted: 27 Jan 2020

See all articles by Loran Chollete

Loran Chollete

Sacred Heart University - Jack Welch College of Business

Sharon G. Harrison

Barnard College

Date Written: December 10, 2019

Abstract

When a policymaker introduces a novel policy, she will not know what the citizens’ choices will be under the policy. In the face of novel policies, citizens themselves may have to construct new choice sets. Such choice construction imparts inherent ambiguity to novel policy implementation: the policymaker does not know the probability that citizens will select actions that accord with the intent of her policy. A policymaker who assumes that citizens will follow a fixed approach may therefore be susceptible to ambiguity neglect, which can result in her policies having unintended consequences. We provide examples of unintended consequences as well as a simple formalization. Our results suggest that before implementing novel policies, governments and policymakers should attempt to elicit preferences from the citizens who will be affected.

Keywords: Ambiguity Neglect, Choice Construction, Indeterminacy, Policy Ineffectiveness,Unintended Consequences

JEL Classification: D62, D78, D8, E61,E71

Suggested Citation

Chollete, Loran and Harrison, Sharon G., Unintended Consequences: Ambiguity Neglect and Policy Ineffectiveness (December 10, 2019). Available at SSRN: https://ssrn.com/abstract=3513644 or http://dx.doi.org/10.2139/ssrn.3513644

Loran Chollete

Sacred Heart University - Jack Welch College of Business ( email )

5151 Park Ave
Fairfield, CT 06432
United States

Sharon G. Harrison (Contact Author)

Barnard College ( email )

Department of Economics
3009 Broadway
New York, NY 10027
United States
212-854-3333 (Phone)

HOME PAGE: http://https://economics.barnard.edu/profiles/sharon-harrison

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