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theory of economic voting has achieved near axiomatic status. Yet the microfoundations of economic voting are not entirely … clear. Quattrone and Tversky (1988) posit that prospect theory can explain economic-political correspondences - suggesting … result not predicted by prospect theory. Findings may imply the importance of politicization of economic conditions …
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We conduct experiments with human subjects in a model with a positive production externality in which productivity is a non-decreasing function of the average level of employment of other firms. The model has three steady states: the low and high steady states are expectationally stable...
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