Investigation of the Design of Social Experiments for Regulatory Reform: The Case of Safety Regulation

Junya Fukumoto, Yuta Goto

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This paper focuses on the special zones system for structural reform. Since it was introduced in 2002, the numbers of proposals and bold ideas are decreasing. Low incentives of potential proposers to make proposals are major problems of the special zones system that need to be resolved. As the causes of this problem, we point out two reasons: an asymmetric authority of the government ministries and agencies at the ex-ante and ex-post assessment of proposals, and an inaccuracy in the ex-post assessment. To understand the characteristics and investigate a design of an efficient social experiment for regulatory reform, we built an incomplete information game model to describe the procedural processes under the special zones system of safety regulations. First, we showed the model has two types of equilibriums by analytically solving the model. Second, by numerical experiment, we showed that the process of social experiments under the special zones system promotes incentives for potential proposers to make proposals on regulatory reform. This effect works well especially when the interests of presiding government ministries are negative for regulatory reform. However, when the results of social experiments are difficult to assess, it does not work well. Finally, we investigated the design of a social experiment by numerical experiments As a result, the incentives of potential proposers drastically decrease when an experimental period is too short, so it is important to set an appropriate experimental period. In addition, we also showed that we can shorten an experimental period for such regulatory reforms that relax regulations to prevent accidents under high accident rates.

Original languageEnglish
Pages (from-to)293-314
Number of pages22
JournalStudies in Regional Science
Volume40
Issue number2
DOIs
Publication statusPublished - 2010 Jan 1

Keywords

  • Cheap Talk Game
  • Design of Social Experiment
  • Proposal System
  • Safety Regulation

ASJC Scopus subject areas

  • Environmental Science(all)
  • Social Sciences(all)

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