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«Abstract This paper considers the implications of an important cognitive bias in information processing, con.rmation bias, in a political agency ...»

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Voter Con…rmation Bias and Electoral Accountability¤

Ben Lockwood

University of Warwick

First version: 8 February 2015

This version: 9 May 2015

Abstract

This paper considers the implications of an important cognitive bias in information processing,

con…rmation bias, in a political agency setting. In the baseline two-period case where only the

politician’s actions are observable before the election, we show that when voters have this bias, it

decreases pandering by the incumbent, and can raise voter welfare as a consequence. This result is robust in several directions, including to the case where the voter can also observe payo¤s with some probability before the election (Maskin and Tirole’s "feedback" case). In the three-period case, with two elections, the dynamic evolution of con…rmation bias can lead to more pandering before the …rst election. Finally, we show that when con…rmation bias is present, other things equal, the case for decision-making by an elected rather than an appointed o¢cial is greater.

KEYWORDS: con…rmation bias, selective exposure, voting, pandering, elections JEL CLASSIFICATION: D72,D83 Address for correspondence; Department of Economics, Warwick University, Coventry, CV4 7 AL, United Kingdom. E-mail B.Lockwood@warwick.ac.uk.

¤ I would like to thank Chris Ellis, and seminar participants at the universities of Oregon, Princeton and Warwick, for helpful comments.

1 1 Introduction This paper contributes to the growing literature on the e¤ect of voter and politician behavioral biases on the performance of electoral institutions. Our focus here is on a key bias in information-processing, con…rmation bias. As Rabin and Schrag (1999) put it, "A person su¤ers from con…rmatory bias if he tends to misinterpret ambiguous evidence as con…rming his current hypotheses about the world". This is one of the most pervasive and well-documented forms of cognitive bias1 ; as Nickerson (1998) says, in a recent survey, "If one were to attempt to identify a single problematic aspect of human reasoning that deserves attention above all others, the con…rmation bias would have to be among the candidates for consideration." Indeed, there is even some evidence of a genetic basis for con…rmation bias (Doll, Hutchison, and Frank (2011)).

Nickerson (1998) emphasizes two mechanisms underlying con…rmation bias; preferential treatment of evidence supporting existing beliefs, and looking only or primarily for positive cases that support initial beliefs. This second mechanism is sometimes called selective exposure.

There is considerable evidence for the …rst mechanism, biased processing of exogenously presented information, as discussed in for example, Rabin and Schrag (1999)2. Notable examples include experiments where subjects were initially questioned in a salient policy issue (Lord, Ross, and Lepper (1979), capital punishment, Plous (1991), safety of nuclear technology) to determine their views, and then presented with the same randomly sampled reading material for and against the issue. After exposure, those initially in favour (against) tended to be more in favour (against), despite having been exposed to the same reading material.

There is also a large body of experimental evidence that selective exposure occurs. In the classic experimental selective-exposure research paradigm, participants work on a binary decision problem and come to a preliminary conclusion (such as choosing one of two investment strategies). Participants are then given the opportunity to search for additional information, which is typically received in the form of short statements indicating the perspectives of newspaper articles, experts, or former participants. In the design, half of available statements will be positive, and half will be negative about each choice, and the participants are asked to indicate those pieces that they would like to read in more detail later on. In a meta-analysis of 91 such studies, Hart et.al. (2009) …nd signi…cant evidence indicating that participants choose additional information that con…rms their initial decisions.

There is also non-experimental evidence, mainly in the context of political campaigns, showing that 1 So salient is con…rmation bias that is has been noted long before modern psychology came into being: ""The human understanding when it has once adopted an opinion draws all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it either neglects and despises, or else by some distinction sets aside and rejects, in order that by this great and pernicious predetermination the authority of its former conclusion may remain inviolate.". Francis Bacon, 1620, quoted in Rabin and Schrag (1999).

2 Rabin and Schrag do not discuss, or model, selective exposure.

2 voters are more likely to access media outlets that con…rm their prior beliefs, (for example, Cha¤ee and Miyo (1983), Stroud (2010), Iyengar and Hahn (2009), Jerit and Barabas (2012)), or talk to friends who share one’s political views (Huckfeldt and Sprague (1988)).

As con…rmation bias is a bias in information processing, it is particularly relevant for political economy models where decision-makers update, and in particular where voters update their information, because as professionals, with access to exert advice, politicians and bureaucrats are perhaps less likely to su¤er form this bias. We focus on the …rst form of bias, preferential treatment of given evidence; selective exposure requires also the modelling of the supply of information by the media and government, and is beyond the scope of this paper.





In this paper, we introduce voter con…rmation bias into a fairly standard political agency model. This model is quite ‡exible; if the voter only observes the actions of the incumbent before the election, the model is a variant of Maskin and Tirole (2004), and if only payo¤s are observed, the model is a variant of that used in Chapter 3 of Besley (2006). To model con…rmatory bias, we adopt the approach of Rabin and Schrag(1999), who assume that when the agent gets a signal that is counter to the hypothesis he currently believes is more likely, there is a positive probability that he misreads that signal as supporting his current hypothesis. The agent is unaware that he is misreading evidence in this way and engages in Bayesian updating that would be fully rational given his environment if he were not misreading evidence.

In the observable action case, the signal of incumbent quality observed by the voter is the binary action taken by the incumbent. So, in this setting, con…rmation bias means that the voter "mis-reads" the action with some probability3. Con…rmation bias is modeled in a similar way in the observable payo¤ case; that is, con…rmation bias means that the voter "mis-reads" the payo¤ with some probability.

The key feature of the Maskin-Tirole model is that it can explain political pandering i.e. choice of policy to follow popular opinion even when this con‡icts with what the benevolent politician knows is best. Our baseline …nding is that in the observable action case, voter con…rmation bias reduces pandering, as it lowers the electoral "reward" for this behavior by reducing the increase in the probability of being elected from pandering. As pandering generally has an ambiguous e¤ect on voter welfare, it is possible that an increase in con…rmation bias (parametrized by the probability of misreading the signal) increases voter welfare4.

There are two kinds of intuition for this result. The …rst is a general second-best one. That is, there is initially a distortion present, pandering behavior, so introducing another distortion, con…rmation bias, need not make the voter worse o¤. The second is more speci…c; as argued by Prat(2005), when voters 3 Note that in our model, the relationship between incumbent quality and the signal is thus determined endogenously in political equilibrium, as opposed to Rabin and Schrag(1999), where the relationship is exogenously speci…ed.

4 This …nding is similar to that of Levy and Razin(2014), who …nd that the cognitive bias of correlation neglect can improve outcomes for voters. However, both the institutions and the mechanism at work are completely di¤erent. They consider direct democracy i.e. a referendum on two alternatives, and correlation neglect causes individuals base their vote more on their information rather than on their preferences.

3 can observe the actions of the politicians, this is the "wrong" kind of transparency; when the voters (the principal) can observe the actions, this can induce pooling or pandering by the agent (the voter). So, from this general intuition, it is reasonable that con…rmation bias, being formally a kind of "garbling" of the action signal, can improve the welfare of the principal. However, con…rmation bias is not equivalent to just garbling the signal of the type, because, following Rabin and Schrag (1999), we assume that the voter ignores his own bias when performing Bayesian updating i.e. is boundedly rational.

We then consider the case of observable payo¤s. Here, the we show that the equilibrium structure is completely di¤erent; the good incumbent behaves non-strategically, and the bad incumbent imitates ("pools" with) the good incumbent with some probability; this probability is decreasing in con…rmation bias. In this case, con…rmation bias is no longer welfare-improving.

We also consider the robustness of our baseline results by allowing the voter to observe the action of the incumbent, and also the payo¤, with some probability (Maskin and Tirole (2004) call this case "feedback"). If this probability is less than one-half, there continues to be a pandering equilibrium, and again, the amount of pandering is decreasing in con…rmation bias.

In another extension, we consider the dynamic evolution of con…rmation bias in a three-period model with two elections. At the beginning of the …rst period, the voter is initially neutral i.e. believes the incumbent is equally likely to be good or bad. If the incumbent is retained, the voter must then revise his beliefs upwards, inducing con…rmation bias. In this case, it can be shown that con…rmation bias increases the probability of pandering in the …rst period. Nevertheless, voter welfare can still increase.

Finally, we revisit the choice between a politician and an unelected o¢cial, the focus of Maskin and Tirole’s original paper. For some parameter values, the politician always dominates. When parameter values are such that this is not the case, i.e. when the choice between an elected and appointed o¢cial is not trivial, con…rmation bias always works in favour of choosing the elected o¢cial; this is because bias reduces pandering. So, in policy areas where con…rmation bias is likely to be strong - perhaps where voters have strong prior beliefs - it is better, other things equal, to have elected o¢cials rather than non-elected o¢cials. This is broadly consistent with the observation that in the public policy arena, technical decisions, such as those concerning monetary policy or utility regulation, are usually taken by appointed o¢cials.

The remainder of the paper is structured as follows. Section 2 discusses related literature, Section 3 describes the model, and Section 4 derives baseline results. Sections 5 and 6 consider the case of observable payo¤s and multiple elections respectively. Finally, Section 7 revisits the choice between a politician and an unelected o¢cial, the focus of Maskin and Tirole’s original paper, in the light of previous results.

4 2 Related Literature This paper is a contribution to a small but growing literature studying the implications of introducing behavioral and cognitive biases into rational choice models of voting. In this literature, this paper is close in spirit to Levy and Razin(2014), who …nd that the cognitive bias of correlation neglect can improve outcomes for voters, due to a second-best argument; in their setting, information aggregation via voting is initially ine¢cient, due to because voters underweight their information when deciding how to vote. If a voter ignores the fact that two of her signals are correlated, she will "overweight" the signals, and thus put more weight on her information, o¤setting the original distortion. However, both the institutions and the mechanism at work are completely di¤erent. They consider direct democracy i.e. a referendum on two alternatives, and correlation neglect causes individuals base their vote more on their information rather than on their preferences.

Of the other related literate in this area, one early contribution is Callander and Wilson (2006), (2008) who introduce a theory of context-dependent voting, where for example, for a left wing voter, the attractiveness of a left wing candidate is greater the more right wing is the opposing candidate, and apply it to the puzzle of why candidates are so frequently ambiguous in their policy. Another is Ghirardato and Katz (2006), who show that if voters are ambiguity-averse, they might strictly prefer abstaining to voting, even if voting is costless5.

Other recent contributions include Ellis (2012), who extends the arguments of Ghirardato and Katz (2006) to investigate information aggregation in large elections, Passarelli and Tabellini (2013), who introduce features based on loss-aversion into a model of redistribution with a benevolent government, and Alesina and Passarelli (2015), who study the e¤ect of loss aversion on majority voting.

All of these contributions study direct democracy, or models of representative democracy, where the alternatives are …xed, or, in the case of Callander and Wilson, a Downsian model of electoral competition, where parties simultaneously commit to platforms before the election. So, I believe this paper is the …rst to study the e¤ect of cognitive biases when there is an agency problem between an incumbent politician and the voters.

3 Set-Up A single voter lives for periods  = 1 2 In each of the two periods, a politician chooses a binary policy  2 f g. The …rst-period incumbent faces an election at the end of his …rst term of o¢ce, where the voter can either re-elect the incumbent or elect a challenger The payo¤ to the action depends on a state of the world  2 f g. Prior to choosing   the incumbent observes the state.



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