The model in the previous chapter showed that as campaign
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issues evolve the preferences expressed by representatives change accordingly. Issues may vary over time for two reasons. First, preferences themselves may change. Second issues may vary though
preferences are fixed. This chapter explores the factors which account for the discrepancy between the set of issues and the set of policy variables available to the legislature. These factors are rational ignorance and a prisoner's dilemma faced by vote~s in all districts.
To develop the context of the rational ignorance, consider an election in which there
are 'many
issues, and suppose that individuals vote on the basis of only partial information about the policy positions of each candidate. Why would a voter remain only partially informed when ignorance may lead him to vote against the candidate whose entire platform offers the voter the highest utility? Since an individual voter is only one vote among many in his district, the probabilitythat his vote affects the final outcome is small. The potential benefits from greater information must be discounted by the tiny probability
that his vote will make a difference. Further, more information is costly; investment in information may not be worthwhile when weighed against the change in expected benefits. Therefore, individuals may rationally choose to vote on the basis of incomplete information about a candidate's policy stands. l
The other factor which contributes to the discrepancy between preferences and issues arises from a prisoner's dilemma imposed by the districting mechanism. EVen if voters in one district bear the costs of information and subsequently raise a new issue in their own campaign, they would change only one vote within the legislature.
Unless many districts undertake the investment simultaneously, legislative action may never follow. 2
Both factors combine to make the relationship between more informed decisions and individual utility improvement very remote.
Consequently, the number of issues pursued by the entire legislature
is likely to be smaller than the set of issues relevant to the ,,,elfare of individuals in a given district.
This situation creates a paradox. To initiate public policy formation, support for a particular position must exist across many districts in order to generate electoral rewards for representative action. Yet this requires solving the public goods problem inherent in the prisoner's dilemma imposed by the districting mechanism. Since no one district gains from initiating action without the support of many others, the public goods problem must be overcome by voters prior
to action by the public sector.
Because action in one district alone is unlikely to alter policy, the existence of gains from public action does not constitute a sufficient condition for action. Nevertheless, public issues do arise and enter many local campaigns. Public action benefiting dj~ffuse
groups does occur. The dynamics of this process, particularly over- coming the- two factors hi.ndering issue formation, are not fully under:""
stood and deserve further investigation. This chapter does not attempt to specify when an issue will form. When it does, however, the model of the legislature in the previous chapter explains legislative response.
The final section of this chapter applies this to safety regulation.
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WANING OF THE MOVEMENT
Though necessary for policy formation, political support across many districts is unstable. Just as it was unlikely to form
in the first place, i t is unlikely to remain for long periods after policy initiation. Several factors contribute to the decline in public support. First, the public goods problem facing all districts remains, but in a new form. The legislature, now under R3 instead of R2,
requires only a handful of representatives on the oversight committee working to ensure the proper outcomes. Other legislators are free to pursue other policy matters; voters in other districts still benefit as long as support remains on the oversight committee.
R4 and the reciprocity theorem ensure that the representatives who join the oversight committee are from those districts where regula-
tion has the .highest marginal impact. This contributes to a policy lag.
If support eventually fades, the most dedicated followers are likely to be the last to give up. Because the most dedicated representatives join the committee, policy change lags behind changes in the distri- bution of opinion in the full legislature.
Another factor contributing to the decline in policy support is the large cost required by each individual to remain informed.
The certain costs, when weighed against the change in expected benefit of remaining informed, are probably high enough to imply a decline in support.
As support declines, electoral rewards are no longer generated and representatives from these districts pursue other matters. If
a small, dedicated opposition exists and remains all along, i t
may assume control over policy administration. The legislature, now in R3, allows a small number of legislators to alter policy outcomes. So, as support fades, the opposition may gain control to mitigate or reverse the original policy through the administration
process.
Presumably, voters across many districts stand to lose from the policy reversal. Why doesn't the political support re-form as the new members of the oversight committee reverse the original decisions?
Besid·2.s the factors hindering the original formation, the existence of the agency fundamentally alters the status quo. A policy reversal which benefits the small opposing minority distributes costs in a different manner and among a different subset of the population than prior to the original agency formation.
The ICC will serve as an illustration. Originally, the market failure arose from the local monopolies enjoyed by the railroads.
This problem was solved by the ICC which outlawed short haul long haul rate differentials. As the problem was solved, support for regulation faded; nevertheless, the ICC remained. Over time, it became more effective as a cartel manager, raising rates on all previously compet- itive routes but continuing the ban on local discrimination. The costs were distributed over consumers in all markets rather than concentrated among a small subset as before.
In conclusion, the policy reversal does not imply that the movement will immediately re-form. Nevertheless, gains from public action remain and the issue may rise again. If public concern does grow,a second policy rever.sal may occur, bringing the public sec tor