A Political Model of Trust

29 Pages Posted: 8 May 2020

See all articles by Marina Agranov

Marina Agranov

California Institute of Technology

Ran Eilat

Ben-Gurion University of the Negev

Konstantin Sonin

University of Chicago - Harris School of Public Policy; Higher School of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: April 2020

Abstract

We analyze a simple model of political competition, in which the uninformed median voter chooses whether to follow or ignore the advice of the informed elites. In equilibrium, information transmission is possible only if voters trust the elites' endorsement of potentially biased candidates. When inequality is high, the elites' informational advantage is minimized by the voters' distrust. When inequality reaches a certain threshold, the trust, and thus the information transmission, breaks down completely. Finally, the size of the elite forming in equilibrium depends on the amount of trust they are able to maintain.

Keywords: cheap talk, inequality, information club, political economy, Trust

JEL Classification: D72, D83

Suggested Citation

Agranov, Marina and Eilat, Ran and Sonin, Konstantin, A Political Model of Trust (April 2020). CEPR Discussion Paper No. DP14672, Available at SSRN: https://ssrn.com/abstract=3594305

Marina Agranov (Contact Author)

California Institute of Technology ( email )

Pasadena, CA 91125
United States

HOME PAGE: http://www.hss.caltech.edu/~magranov/

Ran Eilat

Ben-Gurion University of the Negev ( email )

Be'er Sheva
8410501
Israel

Konstantin Sonin

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Higher School of Economics ( email )

20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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