Theory of White Elephants. A Rational Choice Explanation of Policy Failures in Government Support for Civilian Technology

摘要

Government programs for developing civilian technology sometimes end up in spectacular failures. This paper conceptualizes such failures as a pareto-deficient game, similar to the prisoner's dilemma. Firms expecting that a program is going to be a failure have no incentive to communicate their judgement to government, as long as government finances all development costs. Fortunately there is a way out of the dilemma. Cost-sharing between government and industry creates an incentive for the firms to communicate to government what they realy think of the technology's economic prospects. Empirical evidence is given from the history of the West German and American fast breeder programs. The paper discusses implications of this theory for the concept of government failure. (ERA citation 12:018375)