Heidhues, Paul, and Johan Lagerlöf, (2003), “Hiding Information in Electoral Competition,” Games and Economic Behavior 42, pp. 48-74.
Abstract We model a two-candidate electoral competition in which there is uncertainty about a policy-relevant state of the world. The candidates receive private signals about the true state, which are imperfectly correlated. We study whether the candidates are able to credibly communicate their information to voters through their choice of policy platforms. Our results show that the fact that private information is dispersed between the candidates creates a strong incentive for them to bias their messages toward the electorate’s prior. Information transmission becomes more difficult, the less correlated are the candidates’ signals, the lower is the signals’ quality, and the stronger is the electorate’s prior. Indeed, for weak priors welfare decreases as the prior becomes stronger, and welfare always decreases as the signals become less correlated.
Download pdf by clicking here
For supplementary material (pdf) click here.
