rationalignorancevs-georgemason（36页）.docVIP

Rational Ignorance vs. Rational Irrationality Bryan Caplan Department of Economics and Center for the Study of Public Choice George Mason University Fairfax, VA 22030 bcaplan@ 703-993-2324 February, 1999 JEL Classifications: D84, D72, D62 Keywords: rational ignorance, rational expectations, irrationality Abstract: Beliefs about politics and religion often have three puzzling properties: systematic bias, high certainty, and little informational basis. The theory of rational ignorance (Downs 1957) explains only the low level of information. The current paper presents a general model of “rational irrationality,” which explains all three stylized facts. According to the theory of rational irrationality, being irrational - in the sense of deviating from rational expectations - is a good like any other; the lower the private cost, the more agents buy. A peculiar feature of beliefs about politics, religion, etc. is that the private repercussions of error are virtually nonexistent, setting the private cost of irrationality at zero; it is therefore in these areas that irrational views are most apparent. The consumption of irrationality can be optimal, but it will usually not be when the private and the social cost of irrationality differ – for example, in elections. For discussion and useful suggestions I would like to thank Don Boudreaux, Tyler Cowen, Pete Boettke, Jim Schneider, Geoffrey Brennan, Bill Dougan, Bill Dickens, Mitch Mitchell, Ed Lopez, J.C. Bradbury, Todd Zywicki, David Bernstein, Corina Caplan, Robin Hanson, Dan Klein, Alex Tabarrok, Nicky Tynan, Timur Kuran, seminar participants at George Mason, participants at the Public Choice Outreach seminar, and members of my Armchair Economists’ listserv. Gisele Silva provided excellent research assistance. The standard disclaimer applies. Brady: I do not think about things that... I do not think about! Drummond: Do you ever think about things that you do think about? Jerome Lawrence an