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Learning, voting and the information trap

  • Aleksander Berentsen
  • Esther Bruegger
  • Simon Loertscher

We consider a median voter model with uncertainty about how the economy functions. The distribution of income is exogenously given and the provision of a public good is financed through a proportional tax. Voters and politicians do not know the true production function for the public good, but by using Bayes rule they can learn from experience. We show that the economy may converge to an inefficient policy where no further inference is possible so that the economy is stuck in an information trap.

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Paper provided by Universitaet Bern, Departement Volkswirtschaft in its series Diskussionsschriften with number dp0516.

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Date of creation: Apr 2005
Date of revision:
Handle: RePEc:ube:dpvwib:dp0516
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  1. repec:tpr:qjecon:v:115:y:2000:i:1:p:181-200 is not listed on IDEAS
  2. McLennan, Andrew, 1984. "Price dispersion and incomplete learning in the long run," Journal of Economic Dynamics and Control, Elsevier, vol. 7(3), pages 331-347, September.
  3. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
  4. Robert J. Blendon, 1997. "Bridging the Gap between the Public's and Economists' Views of the Economy," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 105-118, Summer.
  5. Alberto Alesina & George-Marios Angeletos, 2004. "Fairness and Redistribution," Levine's Bibliography 122247000000000283, UCLA Department of Economics.
  6. repec:tpr:qjecon:v:110:y:1995:i:3:p:551-84 is not listed on IDEAS
  7. Thomas Piketty, 1994. "Social Mobility and Redistributive Politics," Working papers 94-15, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Timothy J. Feddersen & Wolfgang Pesendorfer, 1995. "The Swing Voter's Curse," Discussion Papers 1064, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. David Spector, 1999. "Rational debate and one-dimensional conflict," Working papers 99-09, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Tomer Blumkin & Volker Grossmann, 2004. "Ideological Polarization, Sticky Information, and Policy Reforms," CESifo Working Paper Series 1274, CESifo Group Munich.
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