Berentsen, Aleksander; Bruegger, Esther; Loertscher, Simon (April 2005). Learning, voting and the information trap (Discussion Papers 05-16). Bern: Department of Economics
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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.
Item Type: |
Working Paper |
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Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics |
UniBE Contributor: |
Lörtscher, Simon |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
Series: |
Discussion Papers |
Publisher: |
Department of Economics |
Language: |
English |
Submitter: |
Lars Tschannen |
Date Deposited: |
02 Oct 2020 11:11 |
Last Modified: |
05 Dec 2022 15:39 |
JEL Classification: |
D72, H10, D83 |
BORIS DOI: |
10.7892/boris.145680 |
URI: |
https://boris.unibe.ch/id/eprint/145680 |
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