An Economic Theory of Democracy

Chapter 5 defines uncertainty as a lack of knowledge. In most cases this can be mitigated through acquiring information. Generally, more information increases the confidence with which someone can make a decision. Increased confidence also decreases the value of additional information, and confidence may not be necessary if the decision is not important. The process of reasoning belongs to all human beings and helps them apply general principles of causality to specific situations. Contextual knowledge describes awareness of the topics with which an issue is related. Information provides details about the issue itself. Education can help provide contextual knowledge, and one can have knowledge without data or data without knowledge. Voters face uncertainty in the form of their utility incomes changing; new policies having an uncertain impact on their utility; lack of awareness of existing policy and its effects; how a government’s preferences line up with their own; and how other citizens’ preferences line up with their own. Parties may be uncertain regarding economic effects beyond their control; how their policies will affect citizens’ utility or what objective results it will produce; how voters influence one another; how much information voters have regarding their policies; and what position the opposition will adopt.