Rational Irrationality and the Microfoundations of Political Failure

Models of inefficient political failure have been criticized for implicitly assuming the irrationality of voters (Wittman, 1989, 1995, 1999; Coate and Morris, 1995). Building on Caplan's (1999) model of "rational irrationality", the current paper maintains that the assumption of voter irrationality is both theoretically and empirically plausible. It then examines microfoundational criticisms of four classes of political failure models: rent-seeking, pork-barrel politics, bureaucracy, and economic reform. In each of the four cases, incorporating simple forms of privately costless irrationality makes it possible to clearly derive the models' standard conclusions. Moreover, it follows that efforts to mitigate political failures will be socially suboptimal, as most of the literature implicitly assumes. It is a mistake to discount the empirical evidence for these models on theoretical grounds. Copyright 2001 by Kluwer Academic Publishers