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Public Choice

, Volume 145, Issue 1–2, pp 165–180 | Cite as

Habit formation, strategic extremism, and debt policy

  • Egil MatsenEmail author
  • Øystein Thøgersen
Article

Abstract

We suggest a probabilistic voting model where voters’ preferences for alternative public goods display habit formation. Current policies determine habit levels and in turn the future preferences of the voters. This allows the incumbent to act strategically in order to influence the probability of reelection. Comparing to a benchmark case of a certain reelection, we demonstrate that the incumbent’s optimal policy features both a more polarized allocation between the alternative public goods and a debt bias.

Budget deficits Voting Extremism Habit formation 

JEL Classification

D72 D78 H62 

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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Dept. of EconomicsNorwegian University of Science and Technology, NTNUTrondheimNorway
  2. 2.Dept. of EconomicsNorwegian School of Economics and Business Administration, and CESifoBergenNorway

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