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Motivated Reasoning and the Political Economy of Climate Change Inaction

Philipp Denter

TL;DR

This paper develops a two-state game-theoretic model to study how motivated reasoning and anticipatory utility among voters interact with electoral incentives to shape climate policy. Voters may distort information about climate severity via a distorted complexity parameter, producing either an efficient equilibrium with informative voting or an inaction equilibrium where candidates ignore signals, depending on whether welfare losses from severe climate change are moderate or catastrophic. When losses are moderate, trust in government serves as a coordination device that aligns beliefs and policy outcomes, making informative voting and welfare-maximizing policies self-fulfilling; rhetoric can shift this balance by altering perceived severity. Extensions incorporating cognitive costs and costly distortions show robustness of the core mechanisms and illustrate parameter regimes where efficiency can be sustained or undermined, highlighting the practical importance of trust-building and careful climate-framing in political discourse.

Abstract

We study how motivated reasoning affects the provision of climate policy in an electoral competition framework. Voters experience anticipatory disutility when future outcomes appear grim and may therefore distort beliefs in response to adverse information. We develop a game-theoretic model in which voters and politicians receive signals about the severity of climate change. When the anticipated welfare losses from severe climate change are sufficiently large, voters optimally ignore unfavorable information, inducing politicians to campaign on policies appropriate for mild climate change only. When welfare losses are moderate, the model admits a second, efficient equilibrium in which voters trust politicians to implement welfare-maximizing policies and vote informatively, thereby creating incentives for politicians to propose adequate climate policy. The model shows how motivated belief formation and voters' expectations about policy responsiveness jointly determine equilibrium selection between effective climate policy and persistent political inaction.

Motivated Reasoning and the Political Economy of Climate Change Inaction

TL;DR

This paper develops a two-state game-theoretic model to study how motivated reasoning and anticipatory utility among voters interact with electoral incentives to shape climate policy. Voters may distort information about climate severity via a distorted complexity parameter, producing either an efficient equilibrium with informative voting or an inaction equilibrium where candidates ignore signals, depending on whether welfare losses from severe climate change are moderate or catastrophic. When losses are moderate, trust in government serves as a coordination device that aligns beliefs and policy outcomes, making informative voting and welfare-maximizing policies self-fulfilling; rhetoric can shift this balance by altering perceived severity. Extensions incorporating cognitive costs and costly distortions show robustness of the core mechanisms and illustrate parameter regimes where efficiency can be sustained or undermined, highlighting the practical importance of trust-building and careful climate-framing in political discourse.

Abstract

We study how motivated reasoning affects the provision of climate policy in an electoral competition framework. Voters experience anticipatory disutility when future outcomes appear grim and may therefore distort beliefs in response to adverse information. We develop a game-theoretic model in which voters and politicians receive signals about the severity of climate change. When the anticipated welfare losses from severe climate change are sufficiently large, voters optimally ignore unfavorable information, inducing politicians to campaign on policies appropriate for mild climate change only. When welfare losses are moderate, the model admits a second, efficient equilibrium in which voters trust politicians to implement welfare-maximizing policies and vote informatively, thereby creating incentives for politicians to propose adequate climate policy. The model shows how motivated belief formation and voters' expectations about policy responsiveness jointly determine equilibrium selection between effective climate policy and persistent political inaction.

Paper Structure

This paper contains 30 sections, 6 theorems, 35 equations, 2 figures.

Table of Contents

  1. Introduction
  2. Related Literature:
  3. The Model
  4. Equilibrium
  5. Voter Behavior
  6. Candidates
  7. Equilibrium Policy Platforms
  8. Discussion and Implications
  9. Trust in Government
  10. The Importance of Rhetoric
  11. Extensions
  12. Costly Distortions
  13. Cost from Imperfect Decision Making
  14. Cognitive Costs
  15. Policy Motivated Politicians
  16. ...and 15 more sections

Key Result

Lemma 1

Let $\tilde{\kappa}\equiv\frac{b+\Delta}{b+1}$.

Figures (2)

  • Figure 1: Scatterplot with fitted trendline and 95% confidence interval showing countries' CCPI scores on the vertical axis and TGI scores on the horizontal axis.
  • Figure 2: Left panel: Cost function when $\mu = 1$ and $c = 2$. Right panel: $\tilde{\mu}$ as a function of $s$ for $\mu=1$ and different values of $c$. Higher $c$ moves $\tilde{\mu}$ closer to $\mu$.

Theorems & Definitions (7)

  • Lemma 1
  • Corollary 1
  • Proposition 1
  • Proposition 2
  • Proposition 3
  • Lemma 2
  • proof