An economic theory of persuasion

A concluding remark

In the real world, we can observe various persuasive activities, including political advertising. This paper has tried to develop an economic theory of persuasion in collective decision-making.

Section 2 has discussed how individuals persuade the median voter in collective decision-making concerning the social supply level of a public good within the median voter model. Our model shows that persuaders attempt to persuade the median voter to move his optimum to the level which maximizes their expected net gain of persuasion, by using the persuasive way that they believe to certainly be able to persuade him to do so.

Section 3 has explored a solution using persuasion for externalities concerning smoking in a society of two persons. We have considered persuasive activities in three cases. First, a rule permitting smoking is already established. Second, the smoker is prohibited from smoking by another rule. Third, there is no prior rule governing smoking. The last case is interesting. We have made clear that the equi-total sacrifice rule would be mutually acceptable behind the veil of uncertainty, and explored the persuasive activities under the rule.

Our model, however, has many limitations. All functions in the model are linear. Applying the median voter model implies that we have neglected completely the behavior of governmental decision makers. People's persuasive activities depend on the probability function μ_ij, but we have not explored how people formulate the function. Furthermore, our model has assumed that the identity of the persuadee for a persuader is not uncertain but fixed.

Consequently, the problems that remain to be explored are as follows:

• (1) Even when the persuadee's identity for a persuader is fixed, which relationship between them paves the way for successful persuasion, or minimizes the cost of persuasion? In particular, how do the degree of mutual trust, the balance of power, appeal to force, rhetorical devices, and demonstrative methods of facts and reason influence the activities of persuasion?

• (2) If the persuadees' identities for a persuader are uncertain, how does the persuader behave? In the case of a large society, mass communication may be used as a powerful tool for persuasion. Mass communication conveys a lot of information to citizens. The information may be manipulated and skewed by persuaders who consist of politicians, bureaucrats, and interest groups as well as moralists. How do citizens deal with such manipulation?

• (3) How well can an economic theory of mutual persuasion explain reciprocal respect, which seems to derive from a kind of logrolling of value judgements?

• (4) How does persuasion relate to so-called “merit wants” and moral education? Which ways of persuasion are prohibited by constitutional rules?

• (5) Why do individuals usually prefer political externalities to be solved through talks or persuasion rather than by side-payments? Which of the solutions for the externalities (separation, side-payments, and persuasion) is best under which circumstances? How do they mix the solutions to get peaceful coexistence?