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RETROSPECTIVE VOTING AND PARTY POLARIZATION
Author(s) -
Esponda Ignacio,
Pouzo Demian
Publication year - 2019
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12348
Subject(s) - voting , commit , incentive , polarization (electrochemistry) , nash equilibrium , welfare , disapproval voting , microeconomics , economics , public economics , political science , computer science , chemistry , law , market economy , database , politics
We provide a new and favorable perspective on voter naiveté and party polarization. We contrast sophisticated (Nash) versus retrospective voting in a model where two parties commit to policies. Retrospective voters do not understand the mapping between states and outcomes induced by a policy; instead, they simply vote for the party that delivers the highest observed performance, as determined in equilibrium. We show that parties have an incentive to polarize under retrospective, compared to Nash, voting. Moreover, this polarization often results in higher welfare due to a better match between policies and fundamentals.