Herding Among Bureaucrats

44 Pages Posted: 16 Jun 2012 Last revised: 21 Nov 2013

See all articles by Branko Bošković

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law

David P. Byrne

University of Melbourne

Arvind Magesan

University of Calgary

Date Written: June 8, 2013

Abstract

The herding of expert opinions is often rationalized as the outcome of social learning. However, experts are typically individuals with career concerns. As a result, herding can also arise from the fear of opposing consensus opinion and the potential career consequences of being wrong. We empirically test for social learning and career concerns using novel data on bureaucrats’ expert opinions over whether to publicly provide health insurance for pharmaceuticals. We find robust evidence that career concerns are an important source of herd behavior in these policy choices. Our findings have implications for the delegation of policy-making to experts.

Keywords: Experts, Social learning, Career Concerns, Bureaucrats, Pharmaceuticals

JEL Classification: D80, H77, I18

Suggested Citation

Bošković, Branko and Byrne, David P. and Magesan, Arvind Nathan, Herding Among Bureaucrats (June 8, 2013). Available at SSRN: https://ssrn.com/abstract=2085042 or http://dx.doi.org/10.2139/ssrn.2085042

Branko Bošković

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

David P. Byrne (Contact Author)

University of Melbourne ( email )

Level 4
111 Barry Street
Melbourne, Victoria 3010
Australia

HOME PAGE: http://sites.google.com/view/dprbyrne/

Arvind Nathan Magesan

University of Calgary ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

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