This chapter considers the consequences of the low-to-non-existent marginal value of shareholders’ individual voting power in America’s widely held companies. It reviews the empirical literature on rational ignorance and rational irrationality in civic voting. It argues that we should expect similar levels of ignorance and irrationality in shareholder voting. The chapter then considers the evidence for this ignorance and irrationality in: (1) various measures of the value shareholder put on their voting rights; (2) what appears to drive voting outcomes in uncontested director elections; (3) the failure of shareholders to meaningfully hold directors accountable for failures and fraud; (4) the changes in the voting behavior of shareholders once majority voting is introduced; (5) shareholder responses to boards refusing to accept the resignation of a director who loses an election; (6) the evidence that contested director elections (proxy fights) have nothing to do with corporate governance; (7) the ways the economic decisions of shareholders are at variance with their voting behavior; and (8) the evidence shareholders do not pay attention to their own votes, and generally try to keep them purely symbolic.

To make a decision about a decision – whether to delegate, whether to take a small step, whether to pick, whether to opt – people need information. They may not be able to obtain all of the information they need, which is one reason that they might make a second-order decision. But they need to know something, which makes it natural to assume that it is good to obtain information. But when, exactly, is information good? There is a great deal of information that people have no interest in receiving. It has no value for them. It clutters the mind. It is boring. In addition, there is a great deal of information that people want not to receive. It is unpleasant. It is painful. In some cases, people do not want to know, in the sense that they have no particular motivation to find out. They will not take active steps to learn. In others, they want not to know, in the sense that they have a particular motivation not to find out. They decide to avoid learning, and they take active steps to avoid that.

Why people do or do not change their beliefs has been a long-standing puzzle. Sometimes people hold onto false beliefs despite ample contradictory evidence; sometimes they change their beliefs without sufficient reason. Here, I propose that the utility of a belief is derived from the potential outcomes of holding it. Outcomes can be internal (e.g., positive/negative feelings) or external (e.g., material gain/loss), and only some are dependent on belief accuracy. Belief change can then be understood as an economic transaction, in which the multidimensional utility of the old belief is compared against that of the new belief. Change will occur when potential outcomes alter across attributes, for example due to changing environments, or when certain outcomes are made more or less salient.

The idea that the political preferences of citizens and voters are expressive rather than instrumental is well established, and lays a foundation for understanding why citizens and voters adopt the policy preferences offered to them by the elite. Voters realize that no matter how they vote, election outcomes will be unaffected. When they make choices in the market, they get what they choose. When they make political choices, what they get is unaffected by what they choose. Thus, voters may vote for outcomes they would not choose if the choice were theirs alone. The distinction between instrumental and expressive preferences, discussed in this chapter, lays a foundation for the material that follows.

One objective of the patent litigation system is to screen meritorious from non-meritorious patents and invalidate the latter. While much of this screening may occur at trial, some amount of targeting may take place at the time of the filing of the suit itself. In this chapter, we assess the targeting efficiency of the patent litigation system at this earlier filing stage. Should the system indeed screen at this stage, one would predict a higher likelihood of patent lawsuits among a set of patents with weaker underlying validity relative to a set of patents with stronger underlying validity. In prior work (Frakes and Wasserman, Review of Economics and Statistics, 2017), we found that as examiners were given less time to review applications, they granted patents at higher rates, with the resulting marginal patents exhibiting greater markers of invalidity and attracting more litigation. An implication of these findings is that patents with more questionable validity—due to the leniency of the examiner—are indeed more likely to wind up in litigation, a finding supportive of filing-stage screening of meritorious claims. Our analysis in this book chapter attempts to generalize these prior findings to sources of examiner leniency beyond time constraints. More broadly, we characterize an examiner’s leniency by their overall grant rate, taking advantage of the fact that applications are effectively randomized across examiners. Consistent with our prior findings, we find that lenient examiners are more likely, on average, to issue patents with markers suggestive of weaker underlying validity and that are more likely to attract litigation. Ultimately, our findings suggest that legally invalid patents issued by the U.S. Patent Office are substantially more likely to be the target of litigation relative to legally valid patents.

Real-world policymakers face pressure to take action, to legislate, and to attempt to solve problems even in imperfect ways. What kind of paternalistic policies can we reasonably expect policymakers to create? We argue that public-choice pressures will tend to produce suboptimal paternalistic policies, even if we assume behavioral paternalists’ conclusions about human behavior are generally correct. Rational ignorance, bureaucratic self-interest, concentrated benefits and diffuse costs, the influence of rent-seekers and moralists, and other factors will tend to shape policy in undesirable ways. If policymakers are susceptible to biases such as those attributed to regular people, the results could be even worse. Biases with the potential to adversely affect policymaking include action bias, overconfidence, confirmation bias, availability and salience effects, affect and prototype heuristics, and present bias. Because the political sphere offers weak incentives for the self-correction of biases, we expect such biases to be more significant in the public than in the private sphere.