Flip-Flopping and Electoral Concerns

I consider a model of political agency in which an incumbent politician makes two decisions in sequence, having private information about the correct decision in each period. I find that policy reversals signal that a politician is incompetent. This suggests that the stigma associated with flip-flopping can be rationalized as a simple heuristic to select competent politicians. Furthermore, the negative impact of policy reversals on reputation gives the incumbent politician an incentive to disregard new information and stick to his initial policy. When reputation concerns are sufficiently strong, these incentives inhibit policy responsiveness, resulting in an inefficient degree of policy persistence. Term-limited politicians, or politicians with particularly safe (or compromised) election prospects, are more likely to reverse decisions. Relatedly, politicians are only willing to reverse decisions after a sufficient amount of time has passed or when there is sufficient evidence that the state of the world might have changed.