Essays in the Positive Theory of Policy Choice

This manuscript consists of three essays in the positive theory of policy choice. The first essay, titled Equilibrium False Consciousness, focuses on policy choice through majoritarian voting in a model of class conflict and social mobility. It studies a new model of social mobility with two types of voters: high income voters and low income voters. All voters are fully rational and care only about their economic payoff. However, the main result of the chapter is the existence of an equilibrium (for large electorates) where some low income voters cast their ballot for the right wing policy despite knowing that the left wing policy gives them a higher expected payoff. The chapter provides a new explanation for why rational low income voters may oppose redistribution on the basis of their preferences and expectations regarding the prospect of upward mobility. The second essay, titled Incomplete Policymaking: Making Healthcare Policy 2009-2010, explains the emergence of incomplete policies as the outcome of a dynamic logrolling problem between policymakers. The idea that incomplete policies may emerge as a partial solution to the dynamic logrolling problem is new to the formal literature on policy-making. The theory is developed through a narrative of the healthcare policy negotiations that took place in the U.S. Congress between 2009 and 2010. The third and final essay, titled Coordination and Development in Dictatorships, develops a theory of inefficient policy choice by authoritarian regimes, and highlights the tradeoff between the benefits of economic coordination for rulers vis-a-vis the costs of political coordination. One important implication of the theory is the result that part of the impetus for democratization may emerge as a consequence of the eciency gains associated with eliminating some of the intensity of political conflict. This is in sharp contrast to most of the previous formal literature, which emphasizes social conflict at the expense of modernization in explaining the emergence of democracy