Question

Briefly describe the median voter model. When does voting lead to economically inefficient outcomes? Why are individuals more likely to act irrationally when it comes to voting relative to private consumption choices?

Answer 1

The median voter model is described as a majority voting rule which will select outcome most preferable by median voters.
Voting leads to an economically inefficient outcome when there is adverse selection involved. Since voters do not have complete information about the candidate standing for the election, they will vote for the person who they think will be best according to their perception and hence it will result in an inefficient outcome.
Individuals are more likely to act irrationally when it comes to voting because political leaders can often manipute the emotions of the voters and encourage them to vote for them, sometimes even bribe to buy votes in exchange of things the voters might find valuable, or make promises to make the standard of living better. As a result of which the voters vote for those with whom they connect the most and hence based on that perception, vote for them. However, in case of private consumption, the consumers are trying to maximize their utility and would choose the best possible bundle that provides them maximum satisfaction, hence the consumers make more rational decisions.