Soothing Politics

Abstract

Political issues are particularly prone to motivated beliefs, as the individual cost of manipulating one's information is negligible in large elections. We consider a political agency model in which voters learn information about some policy-relevant variable, which they can strategically ignore when it impedes their desire to hold optimistic beliefs. We show that an excessive tendency of voters to maintain desirable beliefs may result in inefficient political decision-making because the electoral return of political courage is not sufficiently high when voters have poor information. However, voters also infer information from political decisions themselves, and their incentives to ignore bad news decrease with the expected efficiency of policy-making. Consequently, there is an efficient equilibrium in which policy-makers are rewarded for selecting optimal policies. Given that politicians and voters' actions are strategic complements, it may coexist with an inefficient equilibrium in which policymakers abstain from implementing policies that convey undesirable information in order to cater to the electorate's demand for soothing policies.