Since 1932, when Justice Louis Brandeis remarked that in a federal system states can serve as "laboratories" of democracy, political decentralization has been thought to stimulate policy experimentation. We reexamine the political economy behind this belief, using a simple model of voting in centralized and decentralized democracies. We find that the electoral logic suggests the opposite conclusion: centralization usually leads to "too much" policy experimentation, compared to the social optimum, while decentralization leads to "too little." Three effects of centralization - an "informational externality," a "risk-seeking" effect, and a "risk-conserving" effect - account for the different outcomes. © 2009 H. Cai and D. Treisman.
CITATION STYLE
Cai, H., & Treisman, D. (2009). Political decentralization and policy experimentation. Quarterly Journal of Political Science, 4(1), 35–58. https://doi.org/10.1561/100.00008039
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