Policy biases with voters’ uncertainty about the economy and the government

We model policy choices where parties competing for election are better informed than voters about the state of the economy. In addition voters are uncertain about the incumbent's preferences and the median voter's vote potentially depends on the state of the economy. The incumbent may bias his policy in order to convey information to the voters and raise his chance of reelection. The bias depends crucially on which kind of uncertainty is the most important. Uncertainty about preferences leads to moderate policies, while uncertainty about the state of the economy leads to extreme policies.