Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30075
Authors: 
Bischoff, Ivo
Siemers, Lars-H. R.
Year of Publication: 
2008
Series/Report no.: 
Joint discussion paper series in economics 2008,24
Abstract: 
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.
Subjects: 
Voting behaviour
dynamic party competition
valence
VP-functions
biased voting
JEL: 
D72
D78
D83
D90
P16
Document Type: 
Working Paper

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