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Inattention, Stability, and Reform Reluctance

Author

Listed:
  • Sergei Mikhalishchev

    (Durham University Business School)

  • Vladimir Novak

    (National Bank of Slovakia)

Abstract

We study a model with rationally inattentive voters and investigate how an office-seeking challenger designs a policy platform in the presence of the incumbent who offers a simple stability-providing policy that preserves the status quo. We show that the incumbent’s simple policy, while not in the best interest of the electorate, creates negative externalities by encouraging the challenger to propose a more moderate platform, which is sub-optimal for the voter. The model also explains why and when the incumbent benefits from the high uncertainty and intermediate cost of information.

Suggested Citation

  • Sergei Mikhalishchev & Vladimir Novak, 2024. "Inattention, Stability, and Reform Reluctance," Working and Discussion Papers WP 8/2024, Research Department, National Bank of Slovakia.
    • Handle: RePEc:svk:wpaper:1112
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    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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