Gresham's Law of Political Communication: How Citizens Respond to Conflicting Information

Although citizens are often exposed to conflicting communications from political elites, few studies examine the effects of conflicting information on the quality of citizens' decisions. Thus, I conduct experiments in which subjects are exposed to conflicting information before making decisions that affect their future welfare. The results suggest that a version of Gresham's Law operates in the context of political communication. When a credible source of information suggests the welfare-improving choice and a less credible source simultaneously suggests a choice that will make subjects worse off, subjects make worse decisions than when only the credible source is available. This occurs because many subjects base their decisions upon the less credible source or forgo participation. This occurs mostly among unsophisticated subjects, who are more easily led astray. These findings reveal important limits to the effectiveness of credible information sources and suggest how political campaigns might strategically use conflicting information to their benefit.