The Economics and Politics of Alternative Realities

Many people hold systems of wrong beliefs, which combine into a semi-coherent alternative reality based on the sinister motives of influential actors. I build models of the supply of and demand for such alternative realities. The key idea is that people believing in alternative realities misperceive not only features of the environment but also the incentives of other actors. Applications of my supply side framework include the analysis of political conspiracy theories that serve to discredit the intellectual elite, fear mongering to prompt mobilization in a conflict, and anti-state narratives that serve to generate political support for fiscal conservatism. My demand side approach formalizes the idea that individuals believe in alternative realities to protect a set of core beliefs fundamental to maintain their preferred identities. These models explain stylized facts in domestic and foreign politics, and generate new predictions which I test.