Democracy, Crises, and Misconceptions

We consider misconceptions about the functioning of the economy as one possible explanation for the emergence of crises in democracies. Furthermore, we study a political process which may lead to successful reform. First of all, we show that voters can make inefficient decisions concerning policy measures because of their insufficient recognition of indirect policy effects. Repeated voting on the basis of such incomplete economic views eventually leads to an economic crisis. Accordingly, the adoption of a correct view may trigger the reversal of a detrimental economic development. We ask whether this could be accomplished by platforms of political parties. Therefore, we analyze a signaling game between a governmental party and voters. We find that extreme reform proposals are particularly credible, and therefore might be the appropriate device for successful reform.

Level thesis:degree_level

thesis.doctoral

Grantor dc:publisher

Universität Heidelberg

Year

2006

Author dc:creator

• Beilharz, Hans-Jörg

Contributors dc:contributor

• Gersbach, Hans

Repository record source_url

http://www.ub.uni-heidelberg.de/archiv/6140

OAI identifier oai:identifier

oai:archiv.ub.uni-heidelberg.de:6140