Information and political failures: To what extent does rational ignorance explain irrational beliefs formation?

This paper discusses Bryan Caplan's "rational irrationality" theory. In particular, it shows that this theory neglects the impact of social construction of information in the beliefs formation process. Conversely, Kuran and Sunstein's competing theory which explains the beliefs formation process through information and reputation cascades mechanisms takes into account this influence (Kuran and Sunstein in Stanford Law Rev 51: 683-768, 1999). Besides, this theory keeps the rational ignorance assumption into the analysis and emphasizes the role of activist interest groups who strategically use voters' ignorance. In this way it provides an economic theory of irrational beliefs formation based on sound political epistemology.