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Imperfect Information, Democracy, and Populism

Author

Listed:
  • Binswanger, J.

    (Tilburg University, Center For Economic Research)

  • Prüfer, J.

    (Tilburg University, Center For Economic Research)

Abstract

The modern world is complex and difficult to understand for voters, who may hold beliefs that are at variance with reality. Politicians face incentives to pander to voters' beliefs to get reelected. We analyze the welfare effects of this pandering and show that it entails both costs and benefits. Moreover, we explore optimal constitutional design in the presence of imperfect information about how the world works. We compare indirect democracy to direct democracy and to delegation of policy making to independent agents. We find that indirect democracy is often welfare maximizing.

Suggested Citation

  • Binswanger, J. & Prüfer, J., 2009. "Imperfect Information, Democracy, and Populism," Discussion Paper 2009-10, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:cd6570a3-6827-4060-8fd6-55bb689e6827
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    File URL: https://pure.uvt.nl/ws/portalfiles/portal/1075270/2009-10.pdf
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    References listed on IDEAS

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    1. Schultz, Christian, 2008. "Information, polarization and term length in democracy," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1078-1091, June.
    2. Buscaglia Edgardo, 2008. "The Paradox of Expected Punishment: Legal and Economic Factors Determining Success and Failure in the Fight against Organized Crime," Review of Law & Economics, De Gruyter, vol. 4(1), pages 290-317, October.
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    Cited by:

    1. Georgy Egorov & Konstantin Sonin, 2013. "A Political Theory of Populism," The Quarterly Journal of Economics, Oxford University Press, vol. 128(2), pages 771-805.

    More about this item

    Keywords

    Imperfect information; beliefs; democracy; populism; accountabil- ity; experts;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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