Regulators’ Experimentation Toolkit • 2: Regulatory experiments
Part A: What is regulatory experimentation? To ‘experiment’ means different things in different contexts by different practitioners. There are various approaches to what constitutes an experiment among policymakers, researchers, innovators and evaluation practitioners. At its loosest, the term is sometimes used to mean ‘trying out something new and seeing what happens’ with little preconceived idea of what the outcomes of the experiment may be. Strict definitions, on the other hand, consider a process an experiment only if it generates evidence that meets very specific criteria or standards, and this usually requires having a clearer prior understanding of the possible outcomes of the experiment and how these will be interpreted. To the Centre for Regulatory Innovation (CRI),
A regulatory experiment is a test or trial of a new product, service, approach or process designed to generate evidence or information that can inform the design or administration of a regulatory regime. This definition can encompass both looser and stricter versions of experiments, but the unifying motivation is to generate evidence or information useful to a regulator.
Regulatory experiments and uncertainty It is the norm rather than the exception that regulators must make decisions under uncertainty – about the environment within which they are operating, and about the impact that their actions will have on that environment. Uncertainty can impair the quality of decision-making (making it less likely that desired outcomes will be achieved), or even make it practically impossible to make an informed decision. Regulatory experimentation is one way regulators can generate evidence or information to reduce uncertainty, and to thereby establish a surer basis for their decisions and actions.
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