Public choice (not only politics!

)
Median voter model
http://4.bp.blogspot.com/-NLiZuP93j-s/TcgsrD72d-I/AAAAAAAAA3s/Og1_r0YELRo/s1600/The+Election+Game.009.png

Expects:

equal distribution of preferences of voters

2 parties only

The party that positions itself in the middle will gain the most voters, because it is closer to all voters.
If a party positions itself further left or right on the spectrum, it will achieve less voters, because the
other party will be closer to > of the voters.
Problems:

there is usually a normal distribution of political preferences

there are not just 2 parties everywhere as soon as more parties are added, the model
changes

Cost and benefit of voting

Cost

The cost of voting is quite high, while the benefit is pretty low

time
studying the program
petrol to get there
etc.

Benefit
very little chance of changing
good feeling?

BUT there is an extremely low probability that you could be the pivotal vote that your vote alone
could change the outcome of the elections. Then, your benefit would be HUGE.

Minimax / Maximin
Minimax Minimalization of maximal loss
Maximin Maximalization of minimal profit

Economic theory of regulation

Benevolent ruler knows what is best

democracy:

Government supply of regulation

The people demand for regulation

Rent seeking
A rent is all consumer or producer surplus. At the side of the producer, a rent is the same as revenue.
But during rent seeking, corruption often occurs

Peltzman effect, Risk compensation

When people sense greater risk, they act more carefully and vice versa.
It has been found that the introduction of compulsory seat belts in cars has decreased the
mortality less than expected.
This is because people started driving worse to compensate the risk