UCouvain Economic Seminar- Gilat Levy, LSE

Gilat Levy

LSE

will give a presentation on

Political social-learning: short-term memory and cycles of polarisation

Abstract:

In this paper, we explore the effect of short-term memory on political outcomes in a model in which politics is viewed as a collective learning process. We analyse a dynamic model in which voters use past observations to make inferences about the true data generating process, and political parties are self-interested with polarised ideal policies. We model a probabilistic voting model where voters balance party loyalty with a desire to vote for the party whose policy provides higher expected utility. We show that short-term memory may lead to political cycles of polarisation and consensus. A short-term history involving only periods of consensus implies little variation in voters' data, and hence less precise knowledge about the true state of the world; this allows parties to push forwards with their self-interest. Alternatively, periods of polarisation imply sufficient variation which at some point allows voters to be confident about what is the right policy; this forces parties to converge on this policy. Our framework also sheds light on the relation between policy uncertainty and political polarisation, and on the effects of crises on political competition.