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University of Cincinnati Law Review

Abstract

The revolving door phenomenon, in which senior public officials transfer from the public service to the private sector after finishing their term as public officials, and vice versa, is widespread. This gives rise to concern of regulatory capture, which happens when the regulators respond to the wishes of strong interest groups, such as the regulated industry, instead of protecting the interests of the general public. The solution is usually found in conflict-of-interest rules which set cooling-off periods for individuals moving from the public to the private sector. This paper proposes that although revolving doors do incur some costs, they also offer certain positive aspects, and might, if designed correctly, increase the quality of supervision. The main argument of this paper is that due to specific behavioral biases such as the Availability bias and the Lock-In bias, combined with office socialization processes which occur while the individual serves as a public official, regulators who join the private sector tend to comply more with regulatory instructions issued by their previous colleagues than other senior executives. This paper also sheds a light on the less-discussed problems lurking on the other side of the revolving door: moving from the private sector to the public sector. These problems result from the behavioral biases and socialization processes mentioned above, and which have a lingering effect on the regulators’ performance abilities as civil servants. It is these processes that make it easier for the regulators to be captured unwittingly, and creates an opening for the regulated industry to affect the due process of regulation.

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