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Polarization and Inefficient Policies


  • : Christian Schultz

    (Institute of Economics, University of Copenhagen)


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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    References listed on IDEAS

    1. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    2. Sutton, John, 1993. "Echoes of Edgeworth: The problem of indeterminacy," European Economic Review, Elsevier, vol. 37(2-3), pages 491-499, April.
    3. Hildenbrand, Werner, 1993. "Francis Ysidro Edgeworth: Perfect competition and the core," European Economic Review, Elsevier, vol. 37(2-3), pages 477-490, April.
    4. Andreu Mas-Colell, 1982. "Perfect Competition and the Core," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 15-30.
    5. Jevons, William Stanley, 1871. "The Theory of Political Economy," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number jevons1871.
    6. Edgeworth, Francis Ysidro, 1881. "Mathematical Psychics," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number edgeworth1881.
    7. Vind, Karl, 1983. "Equilibrium with coordination," Journal of Mathematical Economics, Elsevier, vol. 12(3), pages 275-285, December.
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    Cited by:

    1. 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.
    2. 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.
    3. Gratton, Gabriele, 2014. "Pandering and electoral competition," Games and Economic Behavior, Elsevier, vol. 84(C), pages 163-179.
    4. Gabriele Gratton, 2011. "Pandering, Faith and Electoral Competition," Discussion Papers 2012-22, School of Economics, The University of New South Wales.
    5. 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).
    6. Tilman Klumpp, 2011. "Populism, Partisanship, and the Funding of Political Campaigns," Emory Economics 1107, Department of Economics, Emory University (Atlanta).
    7. Piketty, Thomas, 1999. "The information-aggregation approach to political institutions," European Economic Review, Elsevier, vol. 43(4-6), pages 791-800, April.
    8. 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.

    More about this item


    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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