Correlation Neglect, Voting Behavior, and Information Aggregation

Abstract

In this paper we analyze elections when voters underestimate the correlation between their information sources (“correlation neglect”). We find that this cognitive bias can improve political outcomes. We show that the extreme beliefs which result from correlation neglect induce some voters to base their vote on information rather than on political preferences. We characterize conditions on the distribution of preferences under which this induces higher vote shares for the optimal policies and better information aggregation. (JEL D72, D83)

Are conservatives overconfident?

“…Indeed Levy and Razin (2015) shows the benefit of doing so: they show that correlational neglect can lead to 18 To the extent that both of the shifts above represent a change in the zeitgeist (the former likely does, while further research will be necessary to confirm the latter), we can speculate about their causes. In 1980, Ronald Reagan was elected President of the U.S.…”

The Coevolution of Segregation, Polarized Beliefs, and Discrimination: The Case of Private versus State Education

“…16 See also Dandekar et al (2013 18 Polarisation of beliefs has also been considered in the political economy literature, namely its e¤ect on political outcomes. See Barber and McCarty (2013) and Levy and Razin (2015).…”

Correlation Misperception in Choice

“…Related Literature. Misperception of correlations is a broad concept that has been studied in various guises, ranging from the limited understanding of patterns, as in Piccione and Rubinstein (2003), Eyster and Piccione (2013), and Levy and Razin (2015a), to the inability to derive some logical implications (Lipman, 1999). Evidence of misperception of correlations has been found in several experimental studies such as Eyster and Weizsäcker (2010), Enke and Zimmerman (2013), and Rubinstein and Salant (2015).…”