Is the perceived and preferred policy distance in a party system affected by the ideological position of the individual? Using survey data, this study answers this question by analysing the perceptions and preferences of Swedish citizens and MPs concerning inter-party policy differences. The study departs from the psychological theory of contrast and assimilation as well as rational choice assumptions and tests four hypotheses. 1) An ideologically extreme position leads some individuals to perceive and prefer greater policy differences in a party system than do people with a more centrist ideological position (supported among citizens, but only partly supported among MPs). 2) Among MPs, extreme and centrist ideological positions have no significant effect on the perception of the policy distance within a party system, while such effects are significant among other citizens (supported). 3) Individuals in polarising party factions tend to prefer larger policy distances within a party system than do other individuals (supported). 4) MPs belonging to a polarising party faction tend to prefer larger policy distances in party systems than do other MPs, while no such effects are significant among other citizens (not supported).