by Christian Schultz .

A democratic society is considered where the voters, but not the politicians, are uncertain about how the economy works. The parties therefore have a strategic motive to misinform the voters. Will the voters learn how the economy works and will the policy decisions be efficient? It turns out that the degree of polarization of the political parties is crucial. If the parties are very polarized, voters will not trust the parties and the policy will not reflect how the economy actually works, whereas the opposite is true if the parties are less polarized. Hence, there is a cost to polarization.