In this paper, we provide a model of political effort in a common values environment in which voters' (i.e., the principals') beliefs are possibly biased with respect to the nature of the stochastic process through which the politician's (i.e., the agent's) effort is transformed into outcomes. This bias is motivated by and consistent with the fundamental attribution error in social psychology, whereby people over-attribute the cause of observed outcomes to personal and dispositional causes and under weigh situational causes. We show that the probability of political effort is reduced whenever voters' beliefs are incorrect and examine possible policy implications of our model.

Co-author Roberto Weber