Polarization and inefficient information aggregation under strategic voting

We study a model of two-candidate electoral competition. In our model, each voter has single-peaked preferences for the consequences of policies, but voters receive only partial information about which policies cause their preferred consequences. If voters’ utility functions are convex, they prefer risk, which implies that a safe alternative may not be chosen even when this alternative results in the median voter’s preferred consequence with a probability of one. We provide a necessary and sufficient condition for the existence of a strategic voting equilibrium in which a risky policy that causes polarized consequences defeats the median voter’s preferred alternative. Even when the convexity of voters’ utility functions is weak, which means that policy polarization is socially undesirable, if voters are likely to receive insufficient information, the chosen policy is still polarized. In that case, social welfare is minimized. However, proposals by sufficiently well-informed candidates can eliminate the uncertainty of risky policies through a signaling effect, which, in turn, eliminates the perverse consequences.