MPPS Final Exam

Regulations

Rules that government uses to influence the behavior of government agencies, private firms, and individuals in society

Why we have regulations

To interject and correct for market failures and externalities

Economic Regulation

Focused on promoting fair competition within the marketplace. Involves issues such as monopolies, false advertising, and regulations relations to pricing and services for public utilities

Social Regulation

Focused on promoting health, safety and welfare for workers and the general public. Involves issues related to workplace safety regulations, environmental protections, and regulation of consumer products

Antitrust Laws

Attempts to assure competition by preventing monopolies and unfair methods of competition

Agency Capture

Occurs when these regulators fall under the domination of the sole industry they are supposed to regulate and when no effective consumer organization exists

Sherman Antitrust Act of 1890

-A cornerstone in modern economic regulation

-Focused on Interstate Commerce

-Firms found violating the law can be dissolved or prohibited from unlawful practices. Fines and imprisonment possible, and injured parties can sue for damage

-Broad sweeping but vague legislation aimed at curbing monopolistic practices and promoting fair competition in the marketplace.

Federal Trade Commission Act

Made it illegal for firms to use “unfair methods of competition,” or to engage in “unfair or deceptive acts, or practices,” whether or not those actions had any effect on competition and to enforce antitrust laws by monitoring and preventing anti-competitive business practices

Cost Benefit Analysis

1. List all potential benefits and costs associated with a potential policy

2. Quantify each benefit and cost as accurately as possible (usually expressed in dollars)

3. Determine whether the costs outweigh benefits

Estimated value of a human life

A monetary figure used in Cost Benefit Analysis to assess the worth of saving a life in economic terms, often calculated based on factors like potential earnings and quality of life (about $10 million)

Factors influencing cost of a human life

-Economic Productivity (human capital)

-Willingness to pay (how much are you willing to avoid death)

Rulemaking

Refers to any agency decision that implements, interprets, and/or prescribes law or policy. This is the primary way that the government creates and imposes regulations through the formal process of drafting and finalizing rules, including public notices and comments.

Steps of the Rulemaking process

1. Initiation (an agency is told they need to craft a rule)

2. Analysis and Evaluation

3. Notice of Proposed Rule (Notice published in the Federal Register, allowing the public to comment on the proposed rule)

4. Comment

5. Revision

6. Promulgation of the Final Rule

7. Preparation for Legal Challenge

Deck Stacking

Refers to the process by which Congress can place certain interests in a position to play a role in providing information or feedback, thus influencing (in theory) agency rulemaking

Hawthorne Effect

The discovery that production increases were due to the presence of observers (not environmental factors such as lighting)

Herzberg’s Two Factor Theory of Motivation

-Hygiene needs: factors that provide dissatisfaction at work, if they are not attended to

-Motivation needs: factors that keep you working because you get some intrinsic reward from them

Job Enrichment and Job Enlargement

1. Seeks to give employees opportunities to utilize the skills they have as well as give them a range of tasks and challenges of varying difficulty, as opposed to assembly line

   1. Seeks to help employees feel determined, meaningful, competent, and impactful to their job

McGregor’s Theory X and Theory Y

1. People are lazy, lack ambition, self-centered, resist change, are gullible

2. People are energetic, ambitious, seek responsibility, selfless at times, want to contribute to growth and change, and are intelligent

Equity Theory

Considers worker’s perceptions of the fairness of work outcomes in proportion to their inputs

Input/Outcome Ratio

The comparison between the amount of effort, time, or resources an employee invests in their work (inputs) and the rewards or benefits they receive in return (outcomes) when also compared to a referent peer. This ratio is crucial in determining perceived fairness in the workplace.

Two Forms of Input/Outcome Inequity

1. Underpayment inequity: where an individual's inputs exceed their outcomes compared to others.

2. Overpayment inequity: where an individual's outcomes exceed their inputs relative to others.

Expectancy Theory

Suggests motivation will be high if:

1. High effort leads to high performance

2. High performance will lead to valent outcomes

Public Service Motivation

The intrinsic motivation to serve the public interest, characterized by a desire to contribute to society and help others through one's work, often prevalent in public sector employment.