Inattention, Stability, and Reform Reluctance

Sergei Mikhalishchev () and Vladimir Novak ()
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Sergei Mikhalishchev: Durham University Business School
Vladimir Novak: National Bank of Slovakia

No WP 8/2024, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: We study a model with rationally inattentive voters and investigate how an office-seeking challenger designs a policy platform in the presence of the incumbent who offers a simple stability-providing policy that preserves the status quo. We show that the incumbent’s simple policy, while not in the best interest of the electorate, creates negative externalities by encouraging the challenger to propose a more moderate platform, which is sub-optimal for the voter. The model also explains why and when the incumbent benefits from the high uncertainty and intermediate cost of information.

JEL-codes: D72 D83 H0 P16 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2024-11
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:svk:wpaper:1112

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