We study whether people can fail to choose efficient policies (or institutions) and the reasons why such failure may arise. More precisely, we experimentally show that a large proportion of people vote against policies that would help them overcome social dilemmas. In addition, we show that this is linked to subjects failing to fully anticipate the equilibrium effects of policies. By eliciting subjects’’ beliefs about how others will behave under different policies, we show that inaccurate expectations of equilibrium behavior of others affect voting. In addition, relying on a structural approach, we …find
a signi…cant share of subjects who do not anticipate how their own behavior will change with policy. This combined failure to anticipate the equilibrium consequences of policy drives a full majority, on average, to support bad policies, placing an important hurdle for the ability of groups to resolve social dilemmas through democratic means.