Believe Me, I Am Dumb, but Not Corrupt
38 Pages Posted: 2 Jan 2019 Last revised: 22 Sep 2019
Date Written: September 18, 2019
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: Suggested Citation