Annual Meeting of the American Economic Association
January 3 - 5, 2016
San Francisco, California, USA
How can a regulatory system be designed so that it adapts effectively to changed circumstances? That was the topic of the paper "Adaptive Regulatory Systems" presented by PURC director, Mark A Jamison, at the annual meetings of the American Economic Association. The paper examines adaptive behavior in forming and changing utility regulatory systems. Systems with independent regulatory agencies dampen the effects of political and market power, and diminish information asymmetries, which improves sector performance. But creating or adapting the system triggers resistance from those who experience loss and at weakens regulatory effectiveness for some period of time. Using empirical studies from behavioral economics and psychology, the paper constructs a model that examines where such losses occur and identify techniques for encouraging adaptive behavior. The paper is co-authored with Araceli Castaneda, PURC’s director of leadership studies, and Michelle Phillips, PURC junior economist. The AEA meetings were in San Francisco, California, in January 2016.