Voter Conformism and Inefficient Policies
40 Pages Posted: 12 Apr 2019 Last revised: 14 Nov 2019
Date Written: October 8, 2019
We study the efficiency of policies when some voters are conformists who like being on the winner's side and when policies signal information. A reelection-seeking incumbent has private and fully informative information on both her ability and the quality of her policy. Repealing a policy signals a mistake, which downgrades her perceived ability and may thus cause inefficient policy persistence. Conformism is independent from policies and from voters' perceptions, yet we identify a `conformism advantage' for the incumbent that exists only when there is also an incumbency advantage. We contrast an efficient equilibrium with an inefficient, pooling, one . Strong conformism makes pandering less likely, and may even eliminate it. Nonzero weak conformism can however deteriorate welfare and increase pandering, but paradoxically only when the incumbent is `altruistic' and values social welfare even when not in power.
Keywords: conformity, pandering, incumbency advantage, signaling
JEL Classification: D72, D82
Suggested Citation: Suggested Citation