Essays on the Political Economy of Information

Abstract

In three essays, this dissertation investigates the causes and effects of heterogeneous beliefs among political actors on disagreements in politics. The first chapter starts from the observation that both sides of a political debate can be confident in their beliefs, and the bad faith or fallacy of their opponents, despite access to mutual and large quantities of information. When an information source sends a signal about an unknown state of the world, observers face the difficult task of making multiple inferences from data. This chapter proposes a cognitively less demanding yet incorrect way to update beliefs and derives conditions under which belief polarization, the backfire effect, anchoring, and persuasion by repetition occur. The second chapter focuses on differential access to information in the context of the 2011 Egyptian Uprising. Using survey data, text analysis, and interviews, this chapter shows that activists used Twitter to provide live updates during the protests and Facebook to recruit protesters and organize gatherings. It argues that social media were critical in the success of the first day of protests on January 25, which set off a revolutionary cascade. The third and final chapter studies how heterogeneous beliefs about correct policies may drive extremism in electoral politics using a spatial model of voting in a two-party context. It presents conditions under which an incumbent exploits the divisions in the opposition party to her advantage. Specifically, the incumbent can improve her reelection prospects, despite hurting her appeal to the median voter, by pursuing policies more extreme than her ideal policy if this induces the opposition party to field a more extremist challenger.