Rational Ignorance, Elections, and Reform

Prato, Carlo and Wolton, Stephane (2013): Rational Ignorance, Elections, and Reform.

Abstract

This paper studies how voters' demand for reform affects the probability that economic reforms are adopted and, conditional on being adopted, their quality. We consider a model of electoral competition with rationally inattentive voters in which the success of policy changes is tied to a politician's unobservable competence. We show that when the demand for reform is high, the electoral process becomes over-responsive: Candidates promise reforms despite their inability to carry-out welfare-improving policy changes. As voters must then choose between potentially harmful reforms or no reform, high demand for reform tends to be associated with lower probability of reform and/or lower quality of reform. We explain how our results help organize the mixed evidence regarding the impact of crises on the likelihood of reform.

• Item Type: MPRA Paper
• Language: English
• Keywords: Crises ; Reforms ; Rationally Ignorant Voters ; Campaigns
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D70 - General; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D78 - Positive Analysis of Policy Formulation and Implementation; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness

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