Democracy, the Market, and the Logic of Social Choice Samuel DeCanio Yale University This article compares the types of knowledge democracy and the market require to rationally allocate resources. I argue that high levels of public ignorance and voters’ inability to compare the effects of different parties’ policies make it difficult for parties and elections to rationally allocate resources. Markets mitigate these problems because the simultaneous existence of multiple firms’ products facilitates comparisons that mimic the conditions of scientific experimentation. The economy of knowledge involved in such comparisons indicates there are epistemic advantages to using firms and markets, instead of political parties and elections, to allocate scarce resources. However, in contrast to arguments that markets merely provide better information than political decisions, I argue markets’ epistemic advantages are derived from the way they facilitate comparisons that minimize decision makers’ need for knowledge or understanding. Few men ever really understand their institu- tions. —William Riker T he optimal method for allocating scarce resources among competing ends constitutes one of the most general questions occupying the social sci- ences. While different societies have used various political and economic systems to allocate resources, modern soci- eties rely on two institutions, democracy and the market, and two organizations, private firms and political parties, to produce and distribute goods (Anderson 2006; Arrow 1963; Hall 1997). The relative merits of these institutions and organizations constitute enduring debates within the social sciences. Modern institutions and organizations have been studied from a range of perspectives. Social choice theorists have examined problems associated with preference consistency, transitivity, and collective action (Arrow 1963; Black 1958; Olson 1965; Riker 1982; Shepsle 1989). Normative and epistemic democratic theorists have examined how democracy aggregates information and the nature of deliberation (Ben- habib 1996; Cohen 1986; Dryzek 2001; Fishkin 1993; Habermas 1998; Knight and Johnson 1994; Landemore Samuel DeCanio is Assistant Professor of Political Science, Yale University, 77 Prospect St., New Haven, CT 06520 (samuel.decanio@ yale.edu). Thanks to Peter Boettke, John Bullock, Dan Butler, Casiano Hacker-Cordon, Keith Darden, Stephen DeCanio, Justin Fox, Greg Huber, Matt Kocher, Helene Landemore, David Mayhew, Kevin Miles, Nuno Monteiro, James Morrison, Ryan Oprea, Andrew Reeves, Michelle Schwarze, Lucais Sewell, Stephen Skowronek, Tariq Thachil, Katrina Wehmeyer, and Rick Wilson for helpful comments and suggestions. Special thanks for the comments and suggestions made by three anonymous referees. 2012; Manin 1987; Ober 2013). Empirical public opinion specialists have examined how voters process information and use various heuristics when making political decisions (Kahneman, Slovic, and Tversky 1982; Kuklinski et al. 2000; Lupia 1994; Lupia and McCubbins 1998; Popkin 1994; Sniderman, Brody, and Tetlock 1991). While many have studied how knowledge interacts with democracy, voters are often ignorant of basic po- litical information. Voters cannot name their represen- tatives, describe public policies, or explain their effects (Achen and Bartels 2004; Campbell et al. 1960; Caplan 2007; Converse 1964; Delli Carpini and Keeter 1996; Kinder 1998; Somin 1998). Some suggest widespread public ignorance is among the strongest findings of the social sciences (Bartels 1996, 194; Friedman 1998, 397). Although voter ignorance has been accepted as an empirical finding, some argue voters can use information shortcuts and heuristics, the position of social groups, cues from trusted opinion leaders, values, and the mir- acle of aggregation to make decisions “as if ” they were derived from larger amounts of information (Brady and Sniderman 1985; Conover and Feldman 1989; Erikson, Mackuen, and Stimson 2002; Page and Shapiro 1992). Indeed, politics is hardly unique in this regard. Most social relationships exhibit imperfect information American Journal of Political Science, Vol. 58, No. 3, July 2014, Pp. 637–652 C  2013, Midwest Political Science Association DOI: 10.1111/ajps.12072 637