Model Uncertainty and the Rationality of Economic Policy: An Evolutionary Approach

Posted: 6 Jul 2005

See all articles by Jan Schnellenbach

Jan Schnellenbach

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics; Walter Eucken Institute

Abstract

This paper examines the process of economic policy-making under conditions of model uncertainty. A median voter model is introduced in which the electorate is uncertain of the policy measures available as well as their respective outcomes and opinion formation is a social process of communication and contagion. Learning from experience is also considered. It is shown that economic policy-making under uncertainty produces novel policy routines, but that a mechanism of efficiently utilizing the generated knowledge is missing.

Keywords: Economic policy, model uncertainty, collective beliefs, collective learning

JEL Classification: D78, D83, H73

Suggested Citation

Schnellenbach, Jan, Model Uncertainty and the Rationality of Economic Policy: An Evolutionary Approach. Journal of Evolutionary Economics, Vol. 15, pp. 101-116, March 2005. Available at SSRN: https://ssrn.com/abstract=753387

Jan Schnellenbach (Contact Author)

BTU Cottbus-Senftenberg, Institute for Economics, Chair for Microeconomics ( email )

Erich-Weinert-Str. 1
Cottbus, 03046
Germany

HOME PAGE: http://www.b-tu.de/fg-vwl-mikro/team/prof-dr-jan-schnellenbach

Walter Eucken Institute ( email )

Goethestr. 10
Freiburg, 79100
Germany

HOME PAGE: http://www.eucken.de

Register to save articles to
your library

Register

Paper statistics

Abstract Views
542
PlumX Metrics