Partisanship as a Self-Fulfilling Prophecy

Abstract

This paper provides a new perspective on why political leaders may adopt partisan positions and maintain them over time, even in the face of conflicting evidence. We study a dynamic framework in which politicians are better informed than the voting public about an underlying state of teh economy that determines the desirability of a given policy measure. Importantly, the issue itself is entirely non-partisan, that is, everyone has the same policy preferences. Still, assuming that voters attach ideological labels to both candidates (e.g. through party affiliation) and available policy alternatives, we show that both sides may be caught in an partisan trap of self-fulfilling expectations: because voters expect the identity of office holders to shape their political actions, politicians are tempted to act according to their perceived partisan identities, i.e., the latter act like ‘sunspots’ that determine subsequent policy choices only because voters think they do. We show that the resulting partisan equilibrium is one of political failure and policy persistence. We also consider some extensions to show robustness of our findings.