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Research Details
Rules for the Rulemakers: Asymmetric Information and the Political Economy of Benefit-Cost Analysis, Journal of Regulatory Economics
Abstract
This paper presents a model of an executive administration that decides whether to mandate benefit-cost analysis (BCA) of newly proposed regulations. A regulator has private information about the social benefit of a new rule but may differ from the executive’s preferences for regulation. BCA, which provides a noisy signal of the rule’s social benefit, is most valuable when the executive is regulation neutral. Extremely regulation-averse administrations may be harmed by BCA unless they can bias it. Our results are consistent with use of BCA by U.S. presidential administrations since Reagan.
Type
Article
Author(s)
David Besanko, Avner Kreps, Clair Yang
Date Published
2024
Citations
Besanko, David, Avner Kreps, and Clair Yang. 2024. Rules for the Rulemakers: Asymmetric Information and the Political Economy of Benefit-Cost Analysis. Journal of Regulatory Economics. 66(1): 1-51.