Working Paper: CEPR ID: DP13319
Authors: Kfir Eliaz; Ran Spiegler
Abstract: We formalize the argument that political disagreements can be traced to a "clash of narratives". Drawing on the "Bayesian Networks" literature, we model a narrative as a causal model that maps actions into consequences, weaving a selection of other random variables into the story. An equilibrium is defined as a probability distribution over narrative-policy pairs that maximizes a representative agent's anticipatory utility, capturing the idea that public opinion favors hopeful narratives. Our equilibrium analysis sheds light on the structure of prevailing narratives, the variables they involve, the policies they sustain and their contribution to political polarization.
Keywords: narratives; polarization; model; misspecification; political competition; anticipatory utility
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade policy (F13) | imports from China (F14) |
| imports from China (F14) | employment (J68) |
| trade policy (F13) | employment (J68) |
| competing narratives (D74) | political disagreements (D72) |
| narratives (Y40) | public opinion (D72) |
| narratives (Y40) | policy preferences (D72) |
| historical action frequencies (N23) | effectiveness of narratives (C90) |