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GRF · Innovation Nexus

Experimental governance

Experimental governance lets authorities test new rules, technologies or services under controlled conditions before deciding how to regulate them at scale. Regulatory sandboxes, innovation hubs, pilot regimes and testbeds trade defined flexibility or guidance for close supervision and shared learning. This page sets out how such experiments are designed, where they go wrong and how their evidence is evaluated. It makes no regulatory claims: only competent authorities run sandboxes and decide what follows from them.

02The question

Experimental governance: how the risk develops.

Sandboxes and evaluation without regulatory claims. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.

Mechanism

Learning under supervision

A sandbox admits a limited number of participants under agreed safeguards, so the regulator observes real behaviour before writing rules. The value lies in what is learned and published, not in the admission.

Mechanism

Selection shapes results

Participants who apply are often better resourced and more compliant than the market as a whole. Results from a sandbox cohort may not hold when rules apply to everyone.

Mechanism

Advantage and capture

Admission can signal approval to investors and customers, and close contact can tilt a regulator toward participants. Transparent criteria, equal access and exit rules keep the experiment fair to competitors.

Mechanism

Pilots that never end

Temporary regimes can persist without evaluation, leaving firms and consumers in long uncertainty. An experiment needs an end date, a decision point and a published evaluation to become governance.

03Monitor

Regulatory sandbox board.

The screen a team would use to follow this subject: its measures, states and decisions. Names are examples and values are illustrative.

Regulatory sandbox board

Experimental governance · Regulatory sandbox · Cohort 3

Two pilots near exit testGRF · Innovation Nexus

Cohort

Parametric micro-coverInsuranceAgreed7 of 12Testing
Flood sensor data marketDataPartial4 of 12Conditions
AI permit triagePublic serviceAgreed6 of 12Testing
Drone deliveries, medicalLogisticsAgreed11 of 12Exit test

Exit criteria

Consumer harm
none recorded
Evidence
independent evaluation
Rule change
regulator decides
Wind-down
plan on file

Sandbox cycle

  1. Applyeligibility
  2. Admitsafeguards
  3. Testbounded
  4. Evaluateindependent
  5. Exitor rule change
  6. Publishlessons
Regulatory sandbox board: the screen's structure, terms and states for Experimental governance.Example names and illustrative values; a design, not a record or a live system.
04Indicators

What is measured, and how well.

Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.

IndicatorUnitCadenceSource typeLabel
Active regulatory sandboxes by sectorcount of programmesannualRegulator registers and announcementsPublished statistics
Sandbox applications and admissionscount per cohortper cohortRegulator cohort reportsPublished statistics
Sandboxes with published entry, exit and evaluation criteriapercent of programmesannualRegulator programme documentsPublished statistics
Time from sandbox exit to regulatory decisionmonthsper experimentRegulator docketsPublished statistics
Published sandbox evaluationscount of evaluationsannualRegulator and audit reportsPublished statistics
Consumer complaints and incidents during testingcount per experimentper experimentRegulator supervision recordsREPORTED
Cross-border and multi-regulator testing arrangementscount of arrangementsannualRegulator network and memorandum recordsPublished statistics
05Policy scenarios

Compare instruments: rules, incentives and information.

Three families of instruments side by side against the baseline, each with its own lag and adoption speed, under the coverage and compliance you set; effect sizes are teaching values to replace with evidence. Scenario: named assumptions about the future, not a forecast.

Controls

Baseline trend of the outcome
2.0% a year
Coverage of the instrument
70%
Compliance
75%
Effect size, against the teaching value
100%
Years ahead
20 years

Readouts

Largest reduction at the horizon
Regulation
Its reduction against the baseline
21%
Numbers, methods and sources
YearBaselineRegulationEconomic incentiveInformation and capacity
0100.099.598.899.1
1102.0101.2100.199.8
2104.0102.5101.199.9
3106.1103.5101.6100.0
4108.2103.7101.8100.7
5110.4103.2101.7102.1
6112.6102.0101.6103.9
7114.9100.4101.6105.9
8117.299.2102.1108.0
9119.598.6102.9110.1
10121.998.9104.2112.3
11124.399.7105.7114.5
12126.8101.1107.4116.8
13129.4102.7109.4119.2
14131.9104.5111.4121.6
15134.6106.5113.5124.0
16137.3108.5115.7126.5
17140.0110.7118.0129.0
18142.8112.9120.4131.6
19145.7115.1122.8134.2
20148.6117.4125.2136.9

Methods

  1. Tools of government Hood (1983), The Tools of Government, Macmillan
  2. Carrots, sticks and sermons Bemelmans-Videc, Rist and Vedung (1998), Transaction
  3. Diffusion of innovations Rogers (2003), Diffusion of Innovations, Free Press
  4. Uncertainty fan (parameter Monte Carlo) Spiegelhalter, Pearson and Short (2011), Visualising uncertainty about the future, Science 333
  5. One-at-a-time sensitivity (tornado) Saltelli and others (2008), Global Sensitivity Analysis: The Primer, Wiley

Data

The model runs on the teaching values set by the controls. To calibrate it for a place, read it against these admitted layers and series, which this page's map can draw:

  • Borders Natural Earth
  • Cities Natural Earth
Compare instruments: rules, incentives and information. Illustrative teaching model: it runs on the values set by the controls, not on measured data. Methods: Tools of government (Hood (1983), The Tools of Government, Macmillan); Carrots, sticks and sermons (Bemelmans-Videc, Rist and Vedung (1998), Transaction); Diffusion of innovations (Rogers (2003), Diffusion of Innovations, Free Press).
06Sources

Where the evidence comes from.

Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.

SourceWhat it givesLicence class
UK Financial Conduct Authority regulatory sandbox recordsCohort lists, eligibility criteria and lessons-learned reportsOpen, attribution (FCA terms)
World Bank and CGAP regulatory sandbox researchInventory and design features of fintech sandboxes worldwideFree, attribution (CC BY IGO)
Global Financial Innovation NetworkCross-border testing arrangements among financial regulatorsPublic records, terms per member
EUR-Lex: EU AI Act provisions on sandboxesLegal basis and conditions for AI regulatory sandboxes and testing in real-world conditionsFree reuse, attribution (Commission reuse decision)
OECD Indicators of Regulatory Policy and Governance (iREG)Practice of impact assessment, consultation and ex post evaluation by countryOpen, attribution (OECD terms)
National regulators' registers and annual reportsSandbox programmes in energy, health, transport, data and telecommunicationsPublic records, terms per regulator
07Implementation

From mandate to evaluation, by pillar.

The steps an instrument takes from mandate to evaluation, each with the pillar that runs it, and the decisions that stay with the authority. Teaching model with stated illustrative values, not a prediction.

  1. Mandate and problem framing Competent authority (outside the programme)
    A competent authority frames the problem and the mandate under its own rules. Howlett, Ramesh and Perl (2009)
  2. Evidence and system model Foundry
    The system is modelled with its feedbacks, data and stated limits. OECD (2014), principle 2
  3. Options appraised with scenarios Foundry
    Instruments are compared under scenarios, with uncertainty shown. Hood (1983)
  4. Exercise with stakeholders Universe
    The options are tested in an exercise with those who would implement and bear them. OECD (2014), principle 3
  5. Standard or guidance drafted Nexus Standards
    What works is codified as a standard or guidance, open to comment. Nexus Standards process
  6. Decision by the authority Competent authority (outside the programme)
    The authority decides, outside the programme, with the evidence on record. Howlett, Ramesh and Perl (2009)
  7. Capacity and training Risk Academy
    Those who implement are trained on the decided instrument and its data. Sendai Framework (2015), priority 2
  8. Monitoring and public report Reports
    Indicators are published with sources, limits and corrections. OECD (2014), principle 5
  9. Evaluation and revision Nexus Standards
    Results return to the standard and the model: the cycle closes. Howlett, Ramesh and Perl (2009)

Methods

  1. Policy cycle Howlett, Ramesh and Perl (2009), Studying Public Policy, Oxford University Press
  2. Governance of critical risks OECD (2014), Recommendation of the Council on the Governance of Critical Risks
  3. Layered drawing of directed graphs Sugiyama, Tagawa and Toda (1981), IEEE SMC 11
From mandate to evaluation, by pillar: the steps as recorded, each with its pillar; sources as cited on each step.
08Decisions

Who decides, and what the evidence serves.

Innovation Nexus prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.

Who decidesThe questionEvidence this page serves
Sector regulators (financial, energy, health, telecommunications, data protection)Whether to open a sandbox, on what eligibility and safeguards, and how to end itSandbox design guides; comparative registers of other regulators' criteria and outcomes
National competent authorities under the EU AI ActHow to run AI regulatory sandboxes and supervise testing in real-world conditionsLegal provisions, implementing acts and comparative experience from other sectors
Legislatures and regulatory oversight bodiesWhether a regulator holds the mandate to experiment and how experiments are reviewedComparative legal bases for sandboxes; ex post evaluation practice
Competition authoritiesWhether admission to a sandbox gives participants an unfair advantageAdmission criteria, cohort composition and access records

Outputs this topic produces

  • Sandbox design guides covering eligibility, safeguards, exit and evaluation
  • Comparative registers of experimental regimes with their criteria and published outcomes
  • Evaluation frameworks that separate learning for rule-making from participant success
  • Dialogue formats that bring regulators across sectors and borders together on shared experiments
09Instruments and commitments

How experimental governance is governed: instruments, mandates and commitments.

The instruments, mandates, actors and accountability arrangements a policymaker, diplomat or development agency works with, citing the agreements that set them. Structures follow the frameworks named. Any state or progress drawn is illustrative, not a record.

Policy instrument matrix

The kinds of instrument available on experimental governance, by level of government and cooperation.

Instrument typeLocalNationalRegionalGlobal
RegulatoryZoning, building codesLaws, standards, licensingHarmonised rulesConventions and treaties
EconomicLocal levies, grantsBudget lines, taxes, insurance schemesRisk pools, regional fundsFinancing mechanisms
InformationLocal warningsDisclosure, early warning, statisticsData sharing arrangementsGlobal monitoring and reporting
InstitutionalLocal committeesLead agencies, coordination councilsRegional bodies and secretariatsMultilateral mandates
CooperativeCommunity agreementsPartnership compactsMemoranda and joint programmesAgreements and joint commitments
A typology after the OECD Recommendation on the Governance of Critical Risks; examples of instrument types, not an inventory of any country's measures.
Sendai Framework for Disaster Risk Reduction · UNDRRParis Agreement · UNFCCC2030 Agenda and the Sustainable Development Goals · United NationsInternational Health Regulations · WHO
10Core questions

What experts ask.

The questions concern what is tested, under whose authority, and what is learned.

  • What exactly is being tested: a technology, a business model, a rule or an institutional process?
  • Which authority has the power to permit the test, and under what conditions?
  • How are participants and the public protected during the test?
  • How will results be evaluated, and will they be published?
  • What happens at the end: permanent rules, extension or withdrawal?
11Mechanisms

Mechanisms and drivers.

A regulatory sandbox is a framework set up by a regulator that allows firms to test innovations under supervision, sometimes with tailored requirements, for a limited time. Only a regulator with the relevant legal powers can create one, and it applies only within that regulator's remit. Pilots and test beds are broader tools that public bodies and others use to try new approaches at small scale.

Experiments produce learning only if they are designed to: with clear questions, comparison groups where possible, and honest publication of results, including failures. Common weaknesses include selection of participants who would have succeeded anyway, short duration, and pressure to declare success.

Why now: regulatory sandboxes and testing regimes are spreading, including the AI regulatory sandboxes foreseen under the European Union AI Act (2024). Innovation Nexus compares their rules on scope, safeguards and exit, and a governed trial can be exercised in Universe before it touches the public.

12Methods and data

How it is studied, and where the methods stop.

Method or dataWhat it showsLimits
Evaluation design, including comparison groupsWhether an intervention made a differenceRandomisation is often impractical
Process evaluationHow the test was implementedDoes not establish effect
Comparative analysis of sandboxesHow frameworks differ across jurisdictionsOutcomes are rarely published in comparable form
Systems engineering test protocolsStructured testing of complex systemsControlled tests may not reflect real use
13Methods

How it is studied, and what the methods cannot say.

  1. Policy, institutional and decision scienceMandate and gap mapping · Programme evaluation design · Comparative regulatory analysisApplied here
  2. Systems engineeringRequirements traceability for AI governance · Readiness gates for transfer programmesApplied here
  3. Artificial intelligence and machine learningCoding policy and legal texts · Mapping patents and papers to technologiesApplied here
14Questions

Questions and answers.

Does a sandbox exempt firms from the law?
Generally not. Most sandboxes offer guidance, tailored supervision or limited waivers within what the regulator's mandate allows. Statutory duties such as consumer protection usually continue to apply.
What is the difference between a sandbox and an innovation hub?
An innovation hub gives firms guidance on how existing rules apply. A sandbox admits them to test under supervision, sometimes with defined adjustments to how rules are applied.
How should a sandbox be evaluated?
By what regulators learned and changed: rules clarified, guidance issued, risks found. Participant growth or investment raised is recorded but is not the measure of a sandbox's public value.
Does Innovation Nexus run sandboxes or test products?
No. Sandboxes are run by competent authorities under their own legal bases. Innovation Nexus prepares design and evaluation evidence and convenes dialogue between institutions.
Does Innovation Nexus run a regulatory sandbox?
No. GRF does not regulate and cannot grant regulatory relief. Only competent regulators can run sandboxes. Innovation Nexus studies and convenes on experimental governance.
Is testing in Universe a regulatory approval?
No. Testing within Universe produces evidence for competent institutions to use under their own authority. It confers no regulatory, certification or procurement status.
Why publish failed experiments?
Because failures carry as much information as successes, and hiding them leads others to repeat the same mistakes.
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