Political Accountability and Policy Experimentation: Why to Elect Left-Handed Politicians?

In an environment where voters face an inference problem on the competence level of policy makers, this paper shows how subjecting these policy makers to reelection can reduce the degree of policy experimentation to the benefit of the status quo. This may be a reason why some notable policy experiments were implemented by non-accountable regimes (cf. Chile and China). Whether experimentation in representative democracies is suboptimally low, depends on society's degree of risk aversion relative to that of the decision maker. If the level of experimentation is suboptimal, taking decisions by direct democracy, or electing risk-loving politicians could improve welfare. Interestingly, risk-lovers also seem to be overrepresented among Presidents of various countries.