“Your Ignorance is My Bliss: Learning by Acquaintance, Policy Distortions and the Slippery Slope”“Your Ignorance is My Bliss: Learning by Acquaintance, Policy Distortions and the Slippery Slope”http://www.haverford.edu/calendar/details/258851DC Bryn Mawr Room2014-02-24T15:30:002014-02-24T18:00:00
February 24, 3:30PM–6:00PM
DC Bryn Mawr Room
A talk by Giri Parameswaran, Economics
Tea at 3:45pm
Talk at 4:00pm
Reform opponents often argue that beneficial reforms should be rejected, just in case implementation leads the polity down the slippery slope (of implementing additional reforms) that ends at an outcome that is worse than the status quo. What rationalizes this fear of policy overshooting its target? In the context of public goods provision, I explain the slippery slope sentiment as the consequence of manipulation by some informed voters, of the beliefs of misinformed voters who systematically undervalue the public good. Inefficiently under-providing the public good reduces the opportunities for the misinformed to learn the true value of the good, which suppresses aggregate demand for the good. This incentive to distort is larger when the income of the pivotal voter is further from the median income, and exists even when the number of misinformed are small. Using an inequality measure that is analogous to, but distinct from, Lorenz dominance, I show that slippery slope inefficiencies are more likely to arise when inequality increases.
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