What does experimenting with regulation involve?
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Joel Colón-Ríos “Experimentation and Regulation” (Cross-cutting theme paper prepared for the NZ Law Foundation Regulatory Reform Project, 2013). Experimentation, in the context of regulation, usually involves the adoption of provisional regulatory regimes at a small scale with the purpose of assessing their effects; successful experimental regimes are then implemented at a regional or national level. Regulatory ‘failures’ are thus treated as ‘evidence’, and therefore as providing opportunities to design superior solutions to existing social problems. This paper seeks to shed some light into the experimental approach in three main ways. First, by showing that, although closely connected, there are important differences between experimentation and learning. Second, by examining the limits of experimentation: some regulatory contexts make the experimental method either problematic or inappropriate. Third, the paper proposes a framework that New Zealand policy makers can use to determine whether experimentation is a viable option in the context of a particular policy initiative.
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James Zuccollo, Mike Hensen and John Yeabsley “Weathertight Buildings and Performance-based Regulation: What Lessons can be Drawn from a Complicated and Evolving Situation?” in Susy Frankel and Deborah Ryder (eds) Recalibrating Behaviour: Smarter Regulation in a Global World (LexisNexis 2013). 12.6.4 Explicit regulatory experiments A precautionary approach[46] to dealing with the uncertainty of losses would be to limit exposure until the risks are known. Mumford recommends viewing regulation as an experiment to encourage better recognition of the need for continued monitoring and consequential adjustments to ensure that regimes continue to be effective and efficient.[47] For example, the regulator could allow 1,000 houses to be consented in a particular new design. The outcome for those houses could be regularly reviewed until the regulator was confident that they had a good idea of the risks involved in building that type of house. They could then decide on how to proceed, given society's risk preferences. The word "experiment" carries connotations of measurement and opportunity to learn. These connotations suggest a managed approach to both regulatory risk and evidence-based evolution of the regulation in response to changing circumstances. Applying the analogy of an experiment to regulation raises several practical issues for regulators establishing the experiment including the following: (a) how to define a control and trial for the experiment; (b) how to set and manage the target level of participation in the trial; (c) how participants would choose to join the trial or remain in the control group; (d) how long the experiment would need to run to allow measurement of results; and (e) how to establish feedback and learning loops. A key question for regulators is how to design and manage a more effective and efficient experiment[48] to test the effect of a change in regulation. The challenge for regulators is how to apply an "experimental" approach to changing regulation for complex long-life products because of the complexity and difficulty in defining and controlling the experiment, and the time required to complete the experiment.