ISSN:
1435-8131
Keywords:
Key words: rush, delay, competence, option values, money burning refinement, signalling.
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JEL classification: D72, D82, H50
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract. We examine the consequences when the public is unsure about the ability of governments to foresee the effects of decisions. Governments with much information should invest either immediately or never. Governments that are not well informed should wait for better information. But since governments want to signal their abilities to solve problems, we observe rash decisions and problems are portrayed as crises. We also show that excessive delay can occur. Delay or rush occur even if there is very little uncertainty about abilities of governments. We discuss three institutional rules to alleviate the rush and delay bias: Limiting expenditures before elections, experimental clauses or money burning.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/s101010050003
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