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| dc.title | Why do Citizens Support Price Controls? The Role of Motivated Beliefs |
| dc.contributor.author | Maldonado, Stanislao |
| dc.contributor.author | Sautua, Santiago I. |
| dc.contributor.orgunit | Department of Research and Chief Economist |
| dc.coverage | Colombia |
| dc.date.available | 2026-05-08T00:05:00 |
| dc.date.issue | 2026-05-08T00:05:00 |
| dc.description.abstract | Despite broad expert consensus that price controls are economically inefficient, they remain popular. We study this puzzle through the lens of motivated beliefs: Individuals who favor government intervention may derive gratification from believing that price controls increase welfare. In a laboratory market, participants shopped under monetary incentives and chose between a free-market regime and a price-cap regime. We varied whether participants learned about the cap through factual information or direct exposure to its consequences, and whether their regime choice was decisive. We find that both information and exposure reduced support for the price cap, but exposure was substantially more effective. However, many participants continued to support the cap after experiencing shortages. Participants with decisive regime choices were less likely to endorse the price cap after adverse outcomes. Thus, support for inefficient policies reflects not only misinformation but self-serving beliefs that persist when individuals are not held accountable for policy outcomes. |
| dc.format.extent | 86 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0014036 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/Why-do-Citizens-Support-Price-Controls-The-Role-of-Motivated-Beliefs.pdf |
| dc.language.iso | en |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Integration and Trade |
| dc.subject | Competitiveness |
| dc.subject | Equality |
| dc.subject | Monetary Incentive |
| dc.subject | Policy Making |
| dc.subject.jelcode | C91 - Laboratory, Individual Behavior |
| dc.subject.jelcode | D03 - Behavioral Microeconomics: Underlying Principles |
| dc.subject.jelcode | D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior |
| dc.subject.jelcode | D83 - Search • Learning • Information and Knowledge • Communication • Belief • Unawareness |
| dc.subject.keywords | Price Caps;Motivated Beliefs;Inefficient Economic Policies |
| dc.type | Working Papers |
| idb.identifier.pubnumber | IDB-WP-01820 |
| idb.operation | RG-T4022 |