Terrorism, Anti-Terrorism, and the Copycat Effect

In this paper we contribute to the study of how democracy works when politicians are better informed than the electorate about conditions relevant for policy choice. We do so by setting up and analyzing a game theoretic model of electoral competition. An important feature of the model is that candidate quality is state-dependent. Our main insight is that if the electorate is sufficiently well informed then there exists an equilibrium where the candidates' policy positions reveal their information and the policy outcome is the same as it would be if voters were fully informed (the median policy in the true state of the world).