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Polarization and Inefficient Policies

Author

Listed:
  • : Christian Schultz

    (Institute of Economics, University of Copenhagen)

Abstract

Two parties have different goals. Voters, but not parties, are uncertain about the functioning of the economy, in this case the costs of producing a public good. The parties each propose a policy, an election is held and the policy of the winning party is implemented. Voters and parties care about the level of the public good and costs. Two kinds of sequential equilibria exist; revealing, where voters learn the true costs and the implemented policy adjusts to costs, and non-revealing. If parties' preferences are polarized, only non-revealing equilibria fulfill a refinement criterion like the intuitive criterion. If they are alike, only revealing equilibria fulfill this criterion. Thus, less political polarization improves information revelation.

Suggested Citation

  • : Christian Schultz, "undated". "Polarization and Inefficient Policies," Discussion Papers 93-16, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:9316
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    Citations

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    Cited by:

    1. Gabriele Gratton, 2011. "Pandering, Faith and Electoral Competition," Discussion Papers 2012-22, School of Economics, The University of New South Wales.
    2. Tilman Klumpp, 2011. "Populism, Partisanship, and the Funding of Political Campaigns," Emory Economics 1107, Department of Economics, Emory University (Atlanta).
    3. Otto H. Swank & Phongthorn Wrasai, 2002. "Deliberation, Information Aggregation and Collective Decision Making," Tinbergen Institute Discussion Papers 02-006/1, Tinbergen Institute, revised 03 Dec 2002.
    4. Silvia Dominguez-Martinez & Otto Swank, 2006. "Polarization, Information Collection and Electoral Control," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 26(3), pages 527-545, June.
    5. Christian Schultz, 2003. "Information, Polarization and Delegation in Democracy," EPRU Working Paper Series 03-16, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    6. Piketty, Thomas, 1999. "The information-aggregation approach to political institutions," European Economic Review, Elsevier, vol. 43(4-6), pages 791-800, April.
    7. Gratton, Gabriele, 2014. "Pandering and electoral competition," Games and Economic Behavior, Elsevier, vol. 84(C), pages 163-179.
    8. Azomahou, Theophile & Diene, Mbaye, 2012. "Income polarization and innovation: Evidence from African economies," MERIT Working Papers 048, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    economic models of political processes; social choice studies; voting;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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