Hiding information in electoral competition. (Q1811550)

The authors consider the model of an election with two candidates and one representative voter. A candidate can choose one of two policy alternatives: \(B\) (building a bridge) and \(N\) (not building a bridge). There are two states of the world \(\omega_B\) (the costs of the building will be modest) and \(\omega_N\) (building will be very costly). The voter wants the bridge to be built iff the costs will be modest. On the first step each candidate privately observes a signal about the true state \(\omega\) and then chooses an electoral platform \(x\in \{B, N\}\). The voter observes the candidates' chosen platforms \(x_1\) and \(x_2\) and then chooses for whom to vote. The equilibrium in this 3-person election game for various parameters of the problem (prior probability of the state, degree of correlation between private signals, etc.) is derived.