Information Aggregation Through Costly Political Action

By Susanne Lohmann
1991| Working Paper No. 1130

This paper examines a situation where information is dispersed among the members of a society. The information is pertinent to the individuals’ voting decisions in a two candidate election that is decided by majority rule. While the incumbent is committed to maintain the status quo, the challenger will implement a policy alternative if she is elected. By engaging in political action prior to the election, individuals signal their private information to the electorate in order to affect the election outcome. Based on the number of individuals who are publicly observed to take political action, the electorate rationally updates on the benefits to be derived from overturning the status quo in favor of the policy alternative. If the number of individuals engaged in political action exceeds a critical level, a majority votes in favor of a change in policy.