Journal article

Creating confusion

C Edmond, YK Lu

Journal of Economic Theory | Elsevier | Published : 2021

Abstract

We develop a model in which a politician seeks to prevent a group of citizens from making informed decisions. The politician can manipulate information at a cost. The citizens are rational and internalize the politician's incentives. In the unique equilibrium of the game, the citizens' beliefs are unbiased but endogenously noisy. We interpret the social media revolution as a shock that simultaneously (i) improves the underlying, intrinsic precision of the citizens' information, but also (ii) reduces the politician's costs of manipulation. We show that there is a critical threshold such that if the costs of manipulation fall enough, the social media revolution makes the citizens worse off des..

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University of Melbourne Researchers

Grants

Awarded by RGC of HKSAR


Funding Acknowledgements

We thank Guillermo Ordonez and two anonymous referees for valuable comments and suggestions. We also particularly thank Wioletta Dziuda for detailed comments. We have also benefited greatly from conversations with Kim Sau Chung, Simon Grant, Simon Loertscher, Andy McLennan, Larry Samuelson and Xi Weng. We also thank seminar participants at the ANU, City University of Hong Kong, CUHK (Shenzhen), Guanghua Business School at Peking University, Hong Kong Baptist University, Nanyang Technological University, NUS, SMU, University of Melbourne, UNSW, and University of Queensland and participants at the 2019 Comparative Politics and Formal Theory Conference at UC Berkeley for their comments. Lu acknowledges the financial support from the RGC of HKSAR (GRF HKUST-16501419).