Trust, Coordination, and The Industrial Organization of Political Activism (PDF)
We study political activism by several interest groups with private signals. When their ideological distance to the policy maker is small, a “low-trust” regime prevails: agents frequently lobby even when it is unwarranted, taking advantage of the confirmation provided by others’ activism; conversely, the policy maker responds only to generalized pressure. When ideological distance is large, a “high-trust” regime prevails: lobbying behavior is disciplined by the potential contradiction from abstainers, and the policy maker’s response threshold is correspondingly lower. Within some intermediate range, both equilibria coexist. We then study the optimal organization of influence activities, contrasting welfare levels when interest groups act independently and when they coordinate.