Learning, voting and the information trap

We consider a median voter model with uncertainty about how theeconomy functions. The distribution of income is exogenously given andthe provision of a public good is ¯nanced through a proportional tax.Voters and politicians do not know the true production function for thepublic good, but by using Bayes rule they can learn from experience. Weshow that the economy may converge to an ine±cient policy where nofurther inference is possible so that the economy is stuck in an informationtrap.