Abstract
Political parties committed to grab rents may run for election, and even win, if citizens are uninformed. But, how is the political equilibrium affected if citizens can mitigate this information problem through costly information search? We propose a political equilibrium theory with endogenous information search and turnout. We show that: (i) the political equilibrium generates political uncertainty characterized by a distribution of rent policies; (ii) the expectation of this rent distribution is inversely U-shaped in the information search cost; (iii) turnout is lower and rents are higher the more proportional is the electoral system.
Highlights
The concern that politicians may abuse office to extract rents is of first order importance – to ordinary citizens that depend on the political system for welfare and redistribution, and to scholars that strive to understand political mechanisms
We propose and analyze an equilibrium model of political rents with electoral competition of multiple parties, where citizens endogenously search for information about the parties’ rent policies as well as optimally decide whether to participate or abstain in the election
The main contribution of the paper is to provide a framework for analyzing political-equilibrium implications of endogenous information search
Summary
The concern that politicians may abuse office to extract rents is of first order importance – to ordinary citizens that depend on the political system for welfare and redistribution, and to scholars that strive to understand political mechanisms. The intuition for the reversal is that, when information search costs become sufficiently high (above a threshold value), increasing it even further reduces the propensity of those citizens with the highest search cost to participate in the election This endogenously increases the share of (relatively) informed citizens in the election, implying that equilibrium political rents is expected to be (weakly) lower when voter turnout is lower. At any given participation rate, the equilibrium distribution of political rents is wider when the information search cost is higher, as the parties may get votes for a broader range of rents when the uninformed voters are less inclined to search for information
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