Working Paper: CEPR ID: DP4362
Authors: Hans Gersbach
Abstract: We examine a model in which the public is unsure about the competence of a politician, and whether they are concerned about the long-term consequences of their decisions (statesman) or about the public?s opinion concerning their competence and preferences (populist). The main finding suggests that the public benefits by disregarding the competence of candidates and by re-electing candidates based on their beliefs about whether a politician is a statesman. This paradox of competence might explain why politicians are so concerned about being perceived as statesmen. We also provide a rationale as to why governing by polls can be detrimental for society. Moreover, our model illustrates in general that delaying irreversible project decisions is a bad signal.
Keywords: doublesided asymmetric information; paradox of competence; polls; populists; statesmen
JEL Codes: D72; D80; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| public perceptions of politicians' competence (D72) | paradox of competence (D83) |
| public beliefs about politicians (D72) | political outcomes (D72) |
| competent politician (statesman) (D72) | decisions that align with social welfare (D71) |
| incompetent politician (populist) (D72) | distort decisions to maintain favorable public image (D73) |
| public assessments of competence (D83) | social welfare (I38) |
| governing by polls (D72) | policy distortions (H31) |
| public perceptions (E66) | politicians' investment decisions (G11) |
| competent populists (D72) | mimic statesmen to secure re-election (D72) |