In: Economics
It is 2026 and you are back in your home state, where you work as chief advisor to a state legislator. (Taking PSC 107 made you an expert in legislative matters – it turns out that policymaking is very similar to elections with policy-motivated candidates.) All legislators are policy motivated. This means that an arbitrary legislator i, with ideal point xi, gets utility ?|x?xi| if policy x is approved. Your boss, a moderate legislator with ideal point xB = 0.3, asks for your advice before introducing a bill to replace the status quo policy q = 0.75. If she introduces the bill, it will be sent to a committee, where the members of the committee will vote to decide whether or not the bill is sent to the floor of the state House. For simplicity, we assume that if a bill is sent to the floor it is automatically approved and becomes the new policy.
Currently, the committee is controlled by your boss’ party. The median member of the committee has ideal point xM = 0.6. What is the winset of the status quo q? In other words, what policies is the median committee member willing to approve in order to replace the status quo policy q? (Assume the median approves any policy that gives her at least the same utility as the status quo policy q). (3 points)
(b) What policy should your boss propose? (2 points)