Abstract
This doctoral dissertation comprises three essays addressing two questions: exploring the impact of individual limitations in processing information on strategic outcomes by using two distinct frameworks of inattention, and examining the democratic institutions through a game-theoretic lens, motivated by recent global democratic backsliding.
In “Judgement Aggregation and Rational Inattention,” the author examines the effects of costly information acquisition on strategic voting. The strategic considerations are recast as a Rational Inattention problem to provide conditions for the existence of unique equilibrium. The asymptotic results cast doubt on both Condorcet Jury Theorem and Downs’ Rational Ignorance, former favoring and latter being critical about majority rule with universal suffrage.
“A Framework for Spatial Political Analysis” addresses the importance of the multidimensionality of political ideology and voter abstention due to alienation to understand current political events. This chapter outlines a mathematical framework for the analysis of direct and representative democracy, political competition, political power, and coalition formation. The framework is illustrated by numerical examples and applied to data from the Swedish general elections and the parliament.
“A Behavioral Hybrid New Keynesian Model” assumes inattentive firms and consumers to shocks by incorporating Sparsity-based inattention into a hybrid New Keynesian model in order to reconcile the estimates of the structural model with empirical observations. This generates enough myopia and intrinsic persistence, diminishing the influence of consumption habits and price indexation, while generating impulse response dynamics to monetary policy shocks.