Irrationality as Political Pollution notes
Irrationality as Political Pollution
Economists' efficiency calculations must count the
consumption value of irrationality as a benefit.
a. However, this hardly implies an efficient outcome.
Inefficient Unanimity notes
Inefficient Unanimity Again
With expressive voting, recall that you can get 100% of
people to vote in favor of inefficient policies.
The same holds when voters are rationally irrational.
Suppose voters are trying to as
Instrumental Voting Assumption notes
The Instrumental Voting Assumption
One key assumption we made before the midterm is that
voters vote instrumentally.
In other words, votes care about nothing except the policies
they get. They aren't interested i
Income Education Ideology and Opinion notes
Income, Education, Ideology, and Opinion
For specific opinions (as opposed to party identification),
income empirically often seems to make a large difference.
Ex: High income people seem much more in favo
Intergovernmental Competition notes
Pure Versus Local Public Goods
We often implicitly imagine that public goods literally
benefit everyone; or at least, that there is no easy way to
exclude non-paying beneficiaries.
But frequently, only a select gr
Inefficient Unanimity and Environmentalism notes
Surely any policy that EVERYONE votes in favor of must be
efficient? Brennan and Lomasky prove, surprisingly, that the
answer is NO.
Suppose voters get to decide whether to decla
Case Study: The Determinants of Party Identification, I
What happens if you use basic econometrics to try to sort out
the determinants of party identification?
Linear probability model: Predict the probability of being a
Rational Ignorance vs Rational Irrationality notes
Rational Ignorance Versus Rational Irrationality
What reasons are there to believe that the rational
expectations assumption is true?
The main argument is that systematic errors are costly, so
Meltzer Richard Model notes
The Meltzer-Richard Model
A simple formal model the captures the standard implications
of the SIVH is Meltzer and Richards "A Rational Theory of the
Size of Government.
Basic assumptions of M&R:
Ignorance Irrationality and Systematic Error notes
Ignorance, Irrationality, and Systematic Error
There are two distinct ways economists apply the concept of
Rationality of action
Rationality of belief
In the last twenty years, ra