This study explores how government-imposed policy restrictions in democratic and autocratic institutions can inadvertently harm citizens by reducing their incentive to become politically informed. The core mechanism is that these constraints lower the private returns of political knowledge, as citizens may believe restricted policies will limit redistribution.
Research Context
The analysis centers on fiscal policy restrictions implemented within institutional frameworks characterized by asymmetric information.
Key Observation
Using numerical simulations, we demonstrate how such limitations can paradoxically worsen outcomes for disadvantaged groups in one-third of scenarios. Citizens exposed to these restrictions often assume limited options and consequently reduce their political engagement.
Theoretical Mechanism
The central argument is that policy constraints create perverse incentives by altering citizens' information acquisition strategies.
Policy Implications
The findings suggest policymakers should carefully evaluate the unintended consequences of restricting choices, particularly how such measures might affect citizen motivation to engage with political processes.
| The Perverse Consequences of Policy Restrictions in the Presence of Asymmetric Information was authored by Rafael Hortala-Vallve and Valentino Larcinese. It was published by Cambridge in PSR&M in 2017. |
