Wilful Ignorance: The case of Global Financial Crisis

Abstract

Wilful ignorance implies an unwillingness to ask questions, even when the need to challenge past decisions might be in order.  Financial regulators in the United States failed to question and, therefore, adjust their policies when faced with the possibility that the existing regulatory regime might be leading to financial instability. This abysmal failure that ended with the global financial crisis may have been driven by the biases of the regulators and their unwillingness to accept likely losses for their preferred clients resulting from the changes. In the face of such financial and societal repercussions, it is imperative that we understand the implications of allowing policy makers to be wilfully ignorant.