Costly information acquisition. Better to toss a coin?

Matteo Triossiv (mtriossi@dii.uchile.cl)
Authors registered in the RePEc Author Service: Matteo Triossi

No 267, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile

Abstract: Citizens have little and uneven levels of political knowledge, consistently with the rational ignorance hypothesis. The paper presents a strategic model of common value elections with endogenous information acquisition accounting for these facts. It proves, that contrary to the most optimistic positions about direct democracy, majoritarian elections can fail to aggregate information, when voters have heterogeneous skills. Informational inefficiencies can be partially corrected by improving the skills of the electorate as the population increase or by limiting participation to most competent citizens. The first interpretation is consistent with Rousseau view that an educated citizenry is necessary for a well functioning democracy. The second interpretation provides rational foundations for an epistocratic form of government. JEL Classification Numbers: C72, D72, D82. Keywords: Costly Information Acquisition, Condorcet Jury Theorem.

Date: 2010
New Economics Papers: this item is included in nep-cdm and nep-pol
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