An economic theory of persuasion

Abstract

In the real world, we can observe various persuasive activities, including political advertising. This paper has tried to develop an economic theory of persuasion in collective decision-making. Section 2 has discussed how individuals persuade the median voter in collective decision-making concerning the social supply level of a public good within the median voter model. Our model shows that persuaders attempt to persuade the median voter to move his optimum to the level which maximizes their expected net gain of persuasion, by using the persuasive way that they believe to certainly be able to persuade him to do so. Section 3 has explored a solution using persuasion for externalities concerning smoking in a society of two persons. We have considered persuasive activities in three cases. First, a rule permitting smoking is already established. Second, the smoker is prohibited from smoking by another rule. Third, there is no prior rule governing smoking. The last case is interesting. We have made clear that the equi-total sacrifice rule would be mutually acceptable behind the veil of uncertainty, and explored the persuasive activities under the rule. Our model, however, has many limitations. All functions in the model are linear. Applying the median voter model implies that we have neglected completely the behavior of governmental decision makers. People's persuasive activities depend on the probability function μij, but we have not explored how people formulate the function. Furthermore, our model has assumed that the identity of the persuadee for a persuader is not uncertain but fixed. Consequently, the problems that remain to be explored are as follows: