Working Paper: NBER ID: w23683
Authors: Edward L. Glaeser; Giacomo A. M. Ponzetto
Abstract: Psychologists have long documented that we over-attribute people’s actions to innate characteristics, rather than to luck or circumstances. Similarly, economists have found that both politicians and businessmen are rewarded for luck. In this paper, we introduce this “Fundamental Attribution Error” into two benchmark political economy models. In both models, voter irrationality can improve politicians’ behavior, because voters attribute good behavior to fixed attributes that merit reelection. This upside of irrationality is countered by suboptimal leader selection, including electing leaders who emphasize objectives that are beyond their control. The error has particularly adverse consequences for institutional choice, where it generates too little demand for a free press, too much demand for dictatorship, and responding to endemic corruption by electing new supposedly honest leaders, instead of investing in institutional reform.
Keywords: Fundamental Attribution Error; Political Economy
JEL Codes: D72; E03
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fundamental attribution error (FAE) (G41) | political agency (D73) |
| fundamental attribution error (FAE) (G41) | reelection probability for incumbents (D79) |
| fundamental attribution error (FAE) (G41) | suboptimal leaders (D73) |
| fundamental attribution error (FAE) (G41) | insufficient demand for transparency and reform (D73) |
| fundamental attribution error (FAE) (G41) | excessive demand for dictatorship (D72) |
| fundamental attribution error (FAE) (G41) | misaligned incentives (D82) |
| fundamental attribution error (FAE) (G41) | reduced push for institutional reforms (O17) |