Policy persistence, risk estimation and policy underreaction

Moshe Maor*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

45 Scopus citations

Abstract

In recent years, there has been remarkable progress in our understanding of policy persistence, on the one hand, and of the psychological phenomenon of underreaction, on the other. Surprisingly, there has been no attempt to use robust findings, derived from these efforts, in order to understand the nuances of policy underreaction. Policy underreaction refers to systematically slow and/or insufficient response by policymakers to increased risk or opportunity, or no response at all. This article tries to give the concept of policy underreaction a robust analytical identity by integrating cognitive, social, psychological and emotional variables in the explanation of policy underreaction and by introducing a variation across different types of contextual sources of policy persistence as explanatory variables of this phenomenon. It develops an analytical framework that revolves around two key elements of decision making in situations of risk unfolding over time: (1) policymakers’ underestimation and accurate estimation of increased risks and (2) intra- and extra-organizational sources of policy persistence. Based on these dimensions, the article identifies and illustrates four distinct modes of policy underreaction which reflect differences in the nature of implemented policy.

Original languageAmerican English
Pages (from-to)425-443
Number of pages19
JournalPolicy Sciences
Volume47
Issue number4
DOIs
StatePublished - 16 Nov 2014

Bibliographical note

Publisher Copyright:
© 2014, Springer Science+Business Media New York.

Keywords

  • Bounded rationality
  • No action
  • Policy persistence
  • Policy underreaction
  • Risk underestimation
  • Warnings

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