If the budget allocation for a government agency depends on the last period's spending alone, agency heads have a clear incentive to

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Quizplus · Accepted Answer

When budget allocations depend solely on the previous period's spending, agency heads are incentivized to spend more, even inefficiently, to ensure their future budgets are not reduced. This is because underspending might signal that they can operate with less, potentially leading to budget cuts.

If the Budget Allocation for a Government Agency Depends on the Last