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American Economic Review Vol. 105 No. 4 2015

Correlation Neglect, Voting Behavior, and Information Aggregation

Gilat Levy; Ronny Razin

Department of Economics, London School of Economics, Houghton Street, London, WC2A 2AE (e-mail: )

open access

Abstract

In this paper we analyze elections when voters underestimate the correlation between their information sources (“correlation neglect”). We find that this cognitive bias can improve political outcomes. We show that the extreme beliefs which result from correlation neglect induce some voters to base their vote on information rather than on political preferences. We characterize conditions on the distribution of preferences under which this induces higher vote shares for the optimal policies and better information aggregation.

DOI
10.1257/aer.20140134
Volume
105
Issue
4
Pages
1634-1645
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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