The Race to the Edges
In yesterday's NY Times Virginia Postrel highlighted a recent game-theory economics paper that looked into why Republicans and Democrats were so far apart on religious issues, rather than racing to the middle as political theory predicts.
In essence, the paper argues that it is has to do with how (relatively) few people go to church in the U.S. Politicians need to energize their base, and they do that, in part, by appealing to targeted and motivated groups with strong views on things like religion:
If a group is too small, it's not worth courting. But if it's too big, it includes too many of your opponent's supporters, making targeted messages impossible. If everybody goes to church or belongs to a union, membership in either group will not predict voting behavior.
Assuming that is the case, Why don't more equity analysts don't come out with outrageous calls? While there are plenty of reasons why there is comforts in crowds of analysts huddled around middling forecasts and 10% price-increase targets, you might expect more analysts to take extreme positions -- 100% gains on Google, or that Google will fall by half -- than actually do. There is, after all, a constituency for extreme pessimism, for example, but few high-profile analysts pander to it to differentiate themselves.
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