Arbeitspapier

Good policy choices even when voters entertain biased beliefs: a model with endogenous valence

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In The Myth of the Rational Voter Brian Caplan shows that voters entertain systematically biased beliefs on a number of essential issues of economic policy and concludes that this leads democracies to choose bad policies. We introduce the psychological concept of mental models to address voter' naive reasoning about the economy and thereby explain the persistent bias in beliefs. Next, we develop a game-theoretical model to show that this does not automatically lead to bad policy choices. The model formalizes Caplan's thought experiment No. 4 by introducing endogenous party valence to a model of probabilistic voting. In so doing, we provide an investigation of when good policies are chosen in democracy. Based on our findings, we discuss the impact of different political institutions on economic outcomes.

Language
Englisch

Bibliographic citation
Series: MAGKS Joint Discussion Paper Series in Economics ; No. 2008,24

Classification
Wirtschaft
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Positive Analysis of Policy Formulation and Implementation
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Micro-Based Behavioral Economics: General‡
Capitalist Systems: Political Economy
Subject
Voting behaviour
dynamic party competition
valence
VP-functions
biased voting

Event
Geistige Schöpfung
(who)
Bischoff, Ivo
Siemers, Lars-H. R.
Event
Veröffentlichung
(who)
Philipps-University Marburg, Faculty of Business Administration and Economics
(where)
Marburg
(when)
2008

Handle
Last update
10.03.2025, 11:42 AM CET

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Object type

  • Arbeitspapier

Associated

  • Bischoff, Ivo
  • Siemers, Lars-H. R.
  • Philipps-University Marburg, Faculty of Business Administration and Economics

Time of origin

  • 2008

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Valence.

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