Believe Me, I Am Dumb, but Not Corrupt

38 Pages Posted: 2 Jan 2019 Last revised: 22 Sep 2019

See all articles by Manuel Foerster

Manuel Foerster

University of Hamburg - Department of Economics

Achim Voss

University of Hamburg - Department of Economics

Date Written: September 18, 2019

Abstract

In our political-agency setting, voters are uninformed about two traits of an incumbent politician: ability and bias. A high-ability incumbent can identify the state of nature, whereas a low-ability incumbent has to choose a policy under uncertainty. Neutral incumbents share the voters’ policy
preferences, whereas biased incumbents do not. Immediately before the election, voters learn the state and use this information together with the observed policy to judge the incumbent’s type. When bias (to the “right”) is strong, voters prefer neutral politicians even if they have low ability. Biased high-ability politicians may then secure reelection by appearing uninformed. We show that such imitation behavior occurs when policies to the “left” of prior expectations would maximize voter welfare. Finally, we show that when a news shock reveals the state earlier in the term of office, biased high-ability incumbents may continue imitating, responding to the shock like a neutral incumbent.

Keywords: political agency, asymmetric information, signaling, elections, incompetence, corruption

JEL Classification: D78, D72, D82, D73, C72

Suggested Citation

Foerster, Manuel and Voß, Achim, Believe Me, I Am Dumb, but Not Corrupt (September 18, 2019). Available at SSRN: https://ssrn.com/abstract=3301146 or http://dx.doi.org/10.2139/ssrn.3301146

Manuel Foerster (Contact Author)

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

Achim Voß

University of Hamburg - Department of Economics ( email )

Von-Melle-Park 5
room 2128 C rise
Hamburg, 20146
Germany

HOME PAGE: http://www.wiso.uni-hamburg.de/professuren/mikrooekonomische-theorie-und-experimente/team/wissenscha

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