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Diminished-Dimensional Political Economy

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Abstract

Economists' policy advice is based on models of responses by a variety of economic entities to policy adoptions. There is compelling evidence that these entities do not optimize in at all the fashion that mainstream economics assumes. Rather, they limit decision-making to solving problems of much smaller dimensionality. We consider how political economy goes awry when ignoring diminished dimensionality, and some research avenues opened up by this realization.

Suggested Citation

  • Ronald M. Harstad & Reinhard Selten, 2014. "Diminished-Dimensional Political Economy," Working Papers 1414, Department of Economics, University of Missouri.
    • Handle: RePEc:umc:wpaper:1414
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    References listed on IDEAS

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    1. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
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    Cited by:

    1. Schnellenbach, Jan & Schubert, Christian, 2015. "Behavioral political economy: A survey," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 395-417.
    2. Kuehnhanss, Colin R. & Heyndels, Bruno & Hilken, Katharina, 2015. "Choice in politics: Equivalency framing in economic policy decisions and the influence of expertise," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 360-374.

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    More about this item

    Keywords

    political economy; policy advice; problem complexity; dimensionality;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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