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Title:Habit formation, strategic extremism and debt policy PDF Logo
Authors:Matsen, Egil
Thøgersen, Øystein
Issue Date:2007
Series/Report no.:CESifo working paper 2169
Abstract:We suggest a probabilistic voting model where voters’ preferences for alternative public goods display habit formation. Current policies determine habit levels and in turn the future preferences of the voters. This allows the incumbent to act strategically in order to influence the probability of re-election. Comparing to a benchmark case of a certain re-election, we demonstrate that the incumbent’s optimal policy features both a more polarized allocation between the alternative public goods and a debt bias.
Subjects:budget deficits
voting
extremism
habit formation
JEL:D72
D78
H62
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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