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Political rents and voter information in search equilibrium

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Welcome to our research seminar with Jørgen Juel Andersen. Andersen is an Associate Professor at the BI Norwegian Business School.

 

Title of the seminar:

"Political rents and voter information in search equilibrium"

 

Abstract:

We propose an equilibrium theory of electoral competition with endogenous political rents, information search and voter participation. A key assumption is that the parties’ rent policies are ex ante unobserved by the citizens, but that they may acquire this information through costly search. Our two main results are: (i) the political equilibrium is characterized by a distribution of rent policies; (ii) a party’s expected rent policy is inversely U-shaped in the level of information search cost. The latter result is driven by two competing effects of the information search cost on the expected rent policy of the parties: the information effect and the electoral participation effect. An increase in the information search cost makes citizens less likely to acquire information about parties’ rents and, in isolation, this incentivizes parties to strategically bid up their rents. However, if the information cost increases beyond an endogenously defined threshold, the propensity that the least informed citizens participate in the election decreases. This increases the effective share of the well-informed citizens in the election, which incentivizes parties to reduce their rents to compete for these citizens’ votes. We discuss how our theory offers explanations for empirical patterns that other theories on political rents cannot explain.