Political responsiveness and transparency in defense policymaking

Highlights of “Political Responsiveness and Transparency in Defense Policymaking” • We explore how the policymaker’s reputational concerns affect her policy choice. • We also examine how policy transparency affects citizens’ welfare. • We show that both deterrence failure and wasteful defense spending may be caused. • We classify the policymaker’s equilibrium actions into four categories. • Policy transparency has both positive and negative effects on citizens’ welfare. We develop a political agency model, which takes into account the asymmetry in information revelation across policy outcomes, and explore how the policymaker’s reputational concerns and transparency in actions influence her defense policy choice and its consequences. We demonstrate that the policymaker’s reputational concerns may have perverse effects as her fear of losing reputation by failing to deter a threat or her incentive to posture may lead her to enact defense policies that are suboptimal for citizens. We also find that policy transparency has mixed effects on citizens’ welfare: whereas transparency makes the incompetent policymaker less inclined to overallocate resources to national defense and reduces inefficient arms buildups (the positive effect), it also prompts her to choose insufficient military preparedness and increases the risk of deterrence failure (the negative effect). Our results suggest that when the policymaker has access to sufficiently accurate information, enhancing policy transparency may improve the welfare of citizens.