RISK AVERSION.
Masur ’15 [Jonathan and Eric Posner; February; John P. Wilson Professor of Law at the University of Chicago Law School; law professor at the University of Chicago Law School; University of Chicago Law School, “Toward a Pigouvian State,” no. 503] jchen
We close with one final potential explanation. It is conceivable that regulators are simply highly risk averse—they understand that they have the authority to employ Pigovian taxes, but they have little incentive to experiment and prefer to opt for tried-and-true methods that have been repeatedly validated. Risk aversion might be coupled with misaligned institutional incentives: it is plausible that an agency head has more to lose from attempting a new type of regulation and having it be rejected (judicially or politically) than she has to gain if the regulation succeeds. The safer path of command-and-control regulation might also be the more personally advantageous one. The uncertainty embedded in agencies’ organic statutes might be heightening these tendencies.