Question

Briefly describe the median voter model. When does voting lead to economically inefficient outcomes? Why are individuals more likely to act irrationally when it comes to voting relative to private consumption choices?

Answer 1

Median voter model identifies the unbiased voters which tend to act as game changers while deciding the side for a judgement. While having to form a decision or judgement , some people have clear cut distinction as to whom to vote and support but the rest of the people who are unbiased actually are the decision making force. A median voter can swing his decision in he last minute and that is the point which decides which side the result will favour. Eg . For median voter theory is :

The above graph shows the bias ( right and left ) while the neutral voters are more, hence they can swing the results in either direction.

The results having bias from median voters can be economically inefficient as the results from these are usually last minute and not thought through. The incentives for voting for these is not based on analysis but last minute hassle which is made by short term incentives by people manipulating the median voters. Lack of analysis causes economic inefficiencies.

While voting for private consumption choices , the decisions are made by the median voters , avoiding the social good . Since social good is not observed, the outcomes are not economically efficient and also has negative externalities to it. Hence more often than not, these decisions are irrational and centric to private benefits.