Description

Some societies appear to be better equipped than others to implement efficiency enhancing policy reforms and to deliver positive resu lts out of their implementation. Our model presents an under-examined element of polic y reform and institutional quality, showing how the characteristics of the political system may render citizens unable to properly reward politicians who implement new projects, thus favoring politicians who secure the status quo, albeit mediocre, of the economy. In such an environment, new policy projects are sidelined and political institutional quality remains inert. Political institutions matter because they affect the value for the politicians of staying in office. We show that societies with a suboptimal political system may present institutional bias towards the status quo. This bias arises due to the inability of the ci tizens to design an e ffective voting rule that induces politicians to implem ent new projects successfully.