Working Paper: CEPR ID: DP14672
Authors: Konstantin Sonin; Ran Eilat; Marina Agranov
Abstract: We analyze a model of political competition, in which the uninformed median voter chooses whether to follow or ignore the advice of the elite that forms endogenously to aggregate information. In equilibrium, information transmission is possible only if voters trust the elite's endorsement of potentially biased candidates. When inequality is high, the elite's 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 elite size and thus the extent of information aggregation depends on the amount of trust they can maintain.
Keywords: trust; inequality; political economy; cheap talk; information club
JEL Codes: D72; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low inequality (D31) | high trust (Z13) |
| high trust (Z13) | successful information transmission (L96) |
| successful information transmission (L96) | election of competent candidates (D79) |
| high inequality (D31) | low trust (D80) |
| low trust (D80) | no information transmission (D89) |
| no information transmission (D89) | election of less competent politicians (D72) |
| high inequality (D31) | no information transmission (D89) |
| low inequality (D31) | election of competent candidates (D79) |