Abstract
This paper proposes a new mechanism which can generate the “democratic failure” that democratic institution may select socially inefficient policy outcome. The key assumption is: voters are almost rational in the sense that they are most concerned with economic payoffs that the adopted policy yields, but they are also concerned with policy itself, i.e. ideology, and if they vote for the policy different from their ideology, they incur psychological costs. Under this assumption, even though each voter's ideological preference is negligible, it has a large impact on the society's political choices through the election that aggregates each voter's opinion. Specifically, it is shown that the resulting policy outcome can be irrational in the sense that it substantially reduces the voter's utility. It is also shown that in the presence of negligible ideological preference, each voter's choice can depend on his/her expectations about other voter's choices, which in turn leads to unpredictability of electoral outcome.
