The Microfoundations of Rules vs. Discretion

19 Pages Posted: 18 Jan 2004

See all articles by Daniel B. Klein

Daniel B. Klein

George Mason University - Department of Economics; George Mason University - Mercatus Center

Abstract

Using an N-person model, I explore the microfoundations of benevolent rules-dominant situations (of which the familiar time inconsistency models are examples). I show that under discretion the citizens confront a prisoner's dilemma, and I discuss the similar dilemmas embedded in the time inconsistency models. I then suggest new solutions to benevolent rules dominance: suboptimality can be avoided by accepting the discretionary regime and applying to the citizen population the standard remedies to the prisoner's dilemma.

Keywords: Commitment, time inconsistency, rules dominance, paretian

Suggested Citation

Klein, Daniel B., The Microfoundations of Rules vs. Discretion. Constitutional Political Economy, Vol. 1, No. 3, pp. 1-19, 1990, Available at SSRN: https://ssrn.com/abstract=485542

Daniel B. Klein (Contact Author)

George Mason University - Department of Economics ( email )

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HOME PAGE: http://economics.gmu.edu/people/dklein

George Mason University - Mercatus Center ( email )

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