Results in cognitive psychology and experimental economics suggest that people are prone to systematic misperception of policy. This paper embodies voters' misperceptions of policy into a standard political economy framework with complete information, and examines whether and to what extent political parties may use this misperception to manipulate voters and derive political gains. We analyze the equilibria and welfare implications for different setups. A payroll tax incidence detailed example is used to illustrate the framework.
ASJC Scopus subject areas
- Social Sciences (miscellaneous)
- Economics and Econometrics