Policy-Making with Outside Options: The Case of State Foreclosure Rules.

When analyzing voting behavior, most analyses focus on policy preferences of individuals who are bound by the policies implemented by the electorate of those politicians that win office. In many policy realms, however, the constituent voters are subjected to the implemented policy only if they choose to engage in certain activities. This project focuses on one such policy area: foreclosure law. While elected politicians enact relevant policies, only those voters that choose to participate in the mortgage market are directly affected by those policies. Individuals that do not wish to participate in the mortgage market may instead choose to rent their homes, pay cash, or live with other family members and thereby avoid falling subject to foreclosure law. This paper develops a formal model and empirical analysis of policy-making and economic outcomes in such environments. [ABSTRACT FROM AUTHOR]