Optimization and its Discontents in Regulatory Design: Bank Regulation as an Example
33 Pages Posted: 8 Jan 2010
Date Written: January 8, 2010
Abstract
Economists and economically-trained lawyers tend to speak about regulation from a perspective organized around the basic norm of optimization. By contrast, an important managerial literature espouses a perspective organized around the basic norm of reliability. The perspectives are not logically inconsistent, but the economist’s view sometimes leads in practice to a preoccupation with decisional simplicity and cost minimization at the expense of complex judgment and learning. Drawing on a literature often ignored by economists and lawyers, I elaborate the contrast between the optimization and reliability perspectives. I then show how it illuminates current discussions of the reform of bank regulation.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World
By W. Kip Viscusi and Joseph E. Aldy
-
The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World
By W. Kip Viscusi and Joseph E. Aldy
-
Cigarette Smokers as Job Risk Takers
By W. Kip Viscusi and Joni Hersch
-
Economic Foundations of Cost Effective Analysis
By Alan M. Garber and Charles E. Phelps
-
More Bad News for Smokers? The Effects of Cigarette Smoking on Labor Market Outcomes
By Phillip B. Levine, Tara A. Gustafson, ...
-
Compensating Wage Differentials and the Duration of Wage Loss
By Daniel S. Hamermesh and John R. Wolfe
-
Implementing Cost-Benefit Analysis When Preferences are Distorted
By Matthew D. Adler and Eric A. Posner