Are Voters Rational? Evidence from Gubernatorial Elections
Stanford GSB Working Paper No. 1730
32 Pages Posted: 18 Apr 2002
Date Written: March 2002
Abstract
Standard agency theory suggests that rational voters will vote to re-elect politicians who deliver favorable outcomes. A second implication is that rational voters will not support a politician because of good outcomes unrelated to the politician's actions. Specifically, rational voters should try to filter signal from noise, both in order to avoid electing incompetent, but lucky politicians, and to maximize the link between their votes and optimal incentives. This paper provides insight into the information processing capacities of voters, by measuring the extent to which they irrationally reward state governors for economic fluctuations that are plausibly unrelated to gubernatorial actions. Simple tests of relative performance evaluation reveal that voters evaluate their state's economic performance relative to the national economy. However, these tests only provide evidence of rule-of-thumb performance filtering. More sophisticated tests reveal that voters in oil-producing states tend to re-elect incumbent governors during oil price rises, and vote them out of office when the oil price drops. Similarly, voters in pro-cyclical states are consistently fooled into re-electing incumbents during national booms, only to dump them during national recessions. Consistent with an emerging behavioral literature, this suggests that voters make systematic attribution errors and are best characterized as quasi-rational.
Keywords: Voting, rationality, elections, voter rationality, state elections, economics and politics, voting models, governors, behavioral economics, political economy
JEL Classification: D7, E6, H0, H7
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Are CEOS Really Paid Like Bureaucrats?
By Brian J. Hall and Jeffrey B. Liebman
-
Are CEOS Really Paid Like Bureaucrats?
By Brian J. Hall and Jeffrey B. Liebman
-
The Other Side of the Tradeoff: The Impact of Risk on Executive Compensation
-
Good Timing: CEO Stock Option Awards and Company News Announcements
-
Good Timing: CEO Stock Option Awards and Company News Announcements
-
The Use of Equity Grants to Manage Optimal Equity Incentive Levels
By John E. Core and Wayne R. Guay
-
The Other Side of the Tradeoff: the Impact of Risk on Executive Compensation
-
Stock Options for Undiversified Executives
By Brian J. Hall and Kevin J. Murphy