For example, electoral democracy is an institutional response to a potential preference misalignment between the electorate and the polity. Parties publish manifestos ex-ante to set their mandate. And, if successful, they are held accountable for that mandate by society expost through elections. 11 Democracy, and its associated institutions, is the solution to an ageless principal/agent problem. What is true at the level of the nation state is also true at the level of the firm and the individual. In firms, principal-agent problems can arise because managers put their own preferences (for mega-mergers, mega-bonuses, mega-jets) ahead of shareholders. 12 They  6  A term first popularised in the Book ‘Nudge: Improving Decisions about Health, Wealth, and Happiness’ (Thaler and Sunstein (2008). 7  As discussed in Diamond and Vartiainen (2007). 8  Bergman and Lane (1990). 9  Gailmard (2014). 10  Acemoglu and Robinson (2012). 11  Frerejohn (1986). 12  Jensen and Meckling (1976). 2  BIS central bankers’ speeches  also arise from workers putting their own preferences (say, for an easy life) over managers. 13 Institutional structures – in this case, company and employment law – can help solve these problems. Among individuals, preference biases can also have negative societal implications. In the medical profession, there is research arguing that doctors systematically over-prescribe drugs and over-admit patients to hospital. 14 Neither may be in the patients’, nor societies’, best interests.

Bank of France reports industrial output continued to increase in all sectors in February 1997 BANK OF FRANCE, MONTHLY BUSINESS SURVEY, 17/3/97. In February, according to the business leaders surveyed by the Banque de France, industrial output continued to increase in all sectors. The capacity utilization rate rose slightly. Overall demand grew at a moderate pace. There was strong demand from foreign markets, particularly from northern Europe, including Germany and the United Kingdom, and from the United States and Asia. The rise in the dollar and in sterling reinforced the competitiveness of French products. Growth in demand on the domestic market was much more moderate. Order books are deemed to be satisfactory in all sectors, with the exception of the food-processing industry, where they declined slightly and appear to be insufficient. Inventories of finished products are still somewhat above normal levels. In particular, they are considered to be above desired levels in the food-processing, intermediate goods and automobile sectors. In the coming months activity should continue to increase in all sectors, with the exception of the automobile sector. Commodity prices were stable overall. However, price rises were recorded in certain parts of the intermediate goods industry, such as the rubber and plastics, metal-working, and wood-processing sectors, and in the food processing industry owing to the appreciation of the dollar. Intense competition prevented these increases from being passed on to sales prices, which scarcely changed, except in the automobile sector, where they declined. The business leaders surveyed continued to be cautious in their investment plans.