Cost benefit analysis vs. referenda

Preprint OPEN
Martin J. Osborne ; Matthew A. Turner (2007)
  • Subject: Cost benefit analysis, elections, referenda, project evaluation
    • jel: jel:H11 | jel:H43 | jel:Q51

We consider a planner who chooses between two possible public policies and ask whether a referendum or a cost benefit analysis leads to higher welfare. We find that a referendum leads to higher welfare than a cost benefit analyses in "common value" environments. Cost benefit analysis is better in "private value" environments.
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