Multilevel Governance and Risk Diversification
(with Alessandra Arcuri)
G. Dari Mattiaci - BS
For information contact Jacopo Mazza or Adrian de Groot Ruiz
We study centralized versus decentralized decisionmaking concerning risks. We contribute to previous literature by showing that decentralization can function as a risk-diversification strategy. In particular, we focus on two idiosyncratic features of risk regulation: the role of experts committees in the decisionmaking process and the nature of the regulated object, i.e. risk. We thereby build a model that allows us to study the optimal level of governance for risk law and integrates ideas from the theory of commitee decisionmaking and portfolio theories. We assess the relative desirability of (de-)centralization in various scenarios including independent versus interdependent risks, parochial versus non-parochial preferences, and approval decisions versus decisions over standards. We conclude by discussing the relevance of our results for policymaking.
Please download the full paper by following the link below