At the start of their term, politicians often announce which issue they intend to address. To shed light on this agenda setting, we develop a model in which a politician has to decide whether or not to address a public issue. Addressing an issue means that the politician investigates the issue...

At the start of their term, politicians often announce which issue they intend to address. To shed light on this agenda setting, we develop a model in which a politician has to decide whether or not to address a public issue. Addressing an issue means that the politician investigates the issue...

At the start of their term, politicians often announce which issue they intend to address. To shed light on this agenda setting, we develop a model in which a politician has to decide whether or not to address a public issue. Addressing an issue means that the politician investigates the issue...

Uncertainty about the future preferences of the government may induce policy makers to run excessive budget deficits. As a solution to this problem, economists have proposed to impose a binding debt rule. In this paper we argue that a binding debt rule does not eliminate the distortions due to...

Collective decision procedures should balance the incentives they provide toacquire information and their capacity to aggregate private information. In a decisionproblem in which a project can be accepted or rejected once information about its qualityhas been acquired or not, we compare the...

In models of sequential decision making herd behaviour occurs if the signals smart(dumb) agents receive are (un)correlated and if agents have reputational concerns. We show thatintroducing costly effort to become informed about project payoffs (i) eliminates herdbehaviour and (ii) shifts...

Can vanity do any good? It may seem obvious to answer this question in the negative, as economists have shown how reputational concerns lead agents e.g. to ignore valuable information, to herd, and to become overly risk averse. We explore how proud agents may be a social blessing. An agent may...

Democracies delegate substantial decision power to politicians. Using a model in which an incumbent can design, examine and implement public policies, we show that examination takes place in spite of, rather than thanks to, elections. Elections are needed as a carrot and a stick to motivate...

In a multiperiod setting, decision-makers can learn about the consequences of their decisions throughexperimentation. In this paper we examine how in a two-party system polarization and political instability affectlearning through experimentation. We distinguish two cases:the decision to be made...