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Misconceptions and Political Outcomes

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  • David Romer

Abstract

A large recent literature shows that strategic interactions among actors with conflicting objectives can produce inefficient political decisions. This paper investigates an alternative explanation of such decisions: if individuals' errors in assessing the likely effects of proposed policies are correlated, democratic decision-making can produce inefficient outcomes even in the absence of distributional conflicts or heterogeneous preferences. Choosing candidates from among the best informed members of the population does not remedy the problems created by such errors, but subsidizing information and exposing representatives to information after their election do. Concentration of power has ambiguous effects. Finally, the presence of correlated errors tends to create multiple equilibria in political institutions.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6117.

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Date of creation: Jul 1997
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Publication status: published as Romer, David. "Misconceptions And Political Outcomes," Economic Journal, 2003, v113(484,Jan), 1-20.
Handle: RePEc:nbr:nberwo:6117

Note: EFG ME PE
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  1. Tim Besley & Stephen Coate, . ""An Economic Model of Representative Democracy''," CARESS Working Papres 95-02, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
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  10. Christina D. Romer & David H. Romer, 1997. "Institutions for Monetary Stability," NBER Chapters, in: Reducing Inflation: Motivation and Strategy, pages 307-334 National Bureau of Economic Research, Inc.
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