Learning, voting and the information trap

Aleksander Berentsen, Esther Bruegger and Simon Loertscher

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: 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.

Keywords: Learning; voting and the information trap (search for similar items in EconPapers)
JEL-codes: D72 D83 H10 (search for similar items in EconPapers)
Date: 2005-04
New Economics Papers: this item is included in nep-cdm, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ube:dpvwib:dp0516

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