The War of Information

Joint with: Wolfgang Pesendorfer

Two advocates with opposing interests provide costly information to a voter who must choose between two policies. Players are symmetrically informed and information flows

continuously as long as either advocate is willing to uncur its cost. In the unique subgame perfect equilibrium, an advocate’s probability of winning is decreasing in his cost. When costs are different, increasing the low-cost advocate’s cost benefits the voter. We analyze court proceedings with our model and show that the optimal burden of proof favors the high-cost advocate. If one advocate is informed, equilibrium yields a signaling barrier, a threshold that bounds the voter’s beliefs no matter how much information is revealed.

For more information, contact Steve Matthews.