Essays on Political Economy and Social Preferences

This book covers topics in applied microeconomics and focuses on two areas of economic research, namely political economy and social preferences. The first part takes as a starting point Anthony Downs' famous claim that voters do not have an incentive to gather information on politics and analyzes the arising consequences for voters' and governments' behaviour. Part II covers the field of social preferences and investigates the consequences of individual preferences including the payoffs of reference persons. The first part of this book provides answers to a number of questions related to Downs' proposition. First, do voters indeed rely on cues? If so, on which cues do they rely? And how do they use cues within the process of decision making? Second, if voters are not fully informed and rely on information shortcuts, what kind of incentives for politicians does this create? And, finally, how do politicians react? The second part focuses on social preferences, a topic in economics that has gained a lot of attention in recent years. Concerns for relative standing with respect to income, consumption, and personal attributes are investigated experimentally - with a particular emphasis on explaining potential differences between items.