The Korean Economic Review
A Game-Theoretic Explanation on Legislative Inefficiency in Korea
Yong-Ju Lee (Research Institute of Insurance and Finance, Samsung)Year 2011Vol. 27No. 2
Legislative inefficiency, which is being magnified in Korea, is phenomenologically characterized by two noticeable features: (i) rapid increase of the number of bills introduced by the government in the narrow sense and (ii) sharp decline of the approval rate by the legislature during the same period. Based on this observation, we examine the role of incomplete information in the revelation of legislative inefficiency through a standard signaling game. We might understand legislative inefficiency as a shift to a Semi-separating equilibrium under incomplete information from a Separating equilibrium under complete information, and explain why this understanding is persuasive by examining institutional changes and their effects in Korea.