Abstract.
This paper examines the process of economic policy-making under conditions of model uncertainty. A median voter model is introduced in which the electorate is uncertain of the policy measures available as well as their respective outcomes and opinion formation is a social process of communication and contagion. Learning from experience is also considered. It is shown that economic policy-making under uncertainty produces novel policy routines, but that a mechanism of efficiently utilising the generated knowledge is missing.
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JEL Classification:
D78, D83, H73
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Schnellenbach, J. Model uncertainty and the rationality of economic policy. J Evol Econ 15, 101–116 (2005). https://doi.org/10.1007/s00191-004-0231-y
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DOI: https://doi.org/10.1007/s00191-004-0231-y