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Rational Ignorance Is Not Bliss: When Do Lazy Voters Learn from Decentralised Political Experiments?

  • A popular argument about economic policy under uncertainty states that decentralisation offers the possibility to learn from local or regional policy experiments. Often, an analogy between market competition as a discovery procedure and political competition is used to corroborate this argument. We argue that political learning processes are not trivial and do not occur frictionlessly: Voters have an inherent tendency to retain a given stock of policy-related knowledge which was costly to accumulate, so that yardstick competition is improbable to function well particularly for complex issues, if representatives' actions are tightly controlled by the electorate. We show that factor mobility does have the potential to endogenously disturb equilibria on regional markets for political theories, and therefore does provide for improved political learning processes compared to unitary systems. But the results we can expect are far from the ideal mechanisms of producing and utilising knowledge often described in the literature. In particular,A popular argument about economic policy under uncertainty states that decentralisation offers the possibility to learn from local or regional policy experiments. Often, an analogy between market competition as a discovery procedure and political competition is used to corroborate this argument. We argue that political learning processes are not trivial and do not occur frictionlessly: Voters have an inherent tendency to retain a given stock of policy-related knowledge which was costly to accumulate, so that yardstick competition is improbable to function well particularly for complex issues, if representatives' actions are tightly controlled by the electorate. We show that factor mobility does have the potential to endogenously disturb equilibria on regional markets for political theories, and therefore does provide for improved political learning processes compared to unitary systems. But the results we can expect are far from the ideal mechanisms of producing and utilising knowledge often described in the literature. In particular, collective learning may occur in the relatively efficient region, while the status quo may be fortified in the relatively inefficient region.show moreshow less

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Metadaten
Author: Jan SchnellenbachORCiD
DOI:https://doi.org/10.2139/ssrn.990268
ISSN:0021-4027
Title of the source (English):Journal of Economics and Statistics
Document Type:Scientific journal article peer-reviewed
Language:English
Year of publication:2008
Contributing Corporation:University of Heidelberg
Tag:Policy decentralisation; collective learning; fiscal competition; model uncertainty
Volume/Year:228
Issue number:4
First Page:372
Last Page:393
Faculty/Chair:Fakultät 5 Wirtschaft, Recht und Gesellschaft / FG VWL, insbesondere Mikroökonomik
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