Question

Outline the pros and cons for rules vs discretion.

Answer 1

RULES :

Policymakers know in advance how a policy will respond in various economic situations . So they follow a prescribed path in policy making or simply put they follow the rules . Pros : There is certain precision and decision , avoidance of conflict in decision making , faster action as per given rules . consistency in decision formulations . Cons : no scope for negotiation or flexibility , unresponsive to various situational changes or requirements .

DISCRETION :

Policymakers use their judgement to formulate policies as per events and circumstances . Situationaly appropriate policies are implied . Pros : Flexibility , speedier plan formulations , responsive to various situational changes , objective decision making

Cons : Uncertainty and inconsistency in decision making , chances of conflict due to differing opinions among policymakers , no specified rules followed so there maybe arbitrariness in decision making .