Results in cognitive psychology and experimental economics indicate that under identifiable conditions individuals do not act in an economically rational way. These results are important for Political Economy. Anomalies appear in the behaviour of voters, politicans and administrators. Economic markets do not fully eliminate anomalies in the aggregation process. It is shown that political aggregation by democracy, bargaining or bureaucracy may weaken or strengthen such individual anomalies. Moreover, institutions can partially be interpreted as endogenously emerging as a result of individuals' demands to cope with anomalies.
A longer version of this paper was presented at the Annual Meeting of the European Public Choice Conference held in Linz, 29 March–1 April 1989. We are grateful for the comments made on this occasion, in particular to the formal discussant, Karl-Dieter Opp, as well as to Franz Wirl who also provided us with a detailed written version.