Friday, March 11, 2011

Time Horizons; Democracy Edition

Raghu Rajan argues that democracies are particularly vulnerable to pursuing policies that create and exacerbate moral hazard.

Put simply, in times of crisis, the public focuses on fixing the problem at hand at the cost of creating long-term problems.

Morever, the public does not have a long memory, a long time horizon, or an appetite for detail.

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