Left Behind Voters and the Rise of Populism

Across many democracies, traditional politicians do not (seem to?) promote the interests of the common people anymore, even though this group is the majority. We address this puzzle in a model with rational politicians and voters. The model highlights two forces behind electoral success: numbers and knowledge. Numbers favours the majority. Knowledge favours the better informed minority. We show that in a two-party system electoral competition may lead parties to cater to the interests of the more informed minority and to ignore the interests of the common people. We then show that, when the key electoral issues are likely to have distributional consequences, the common people's demand for representation encourages third-party entry with an anti-elite platform, a common electoral strategy of populists. We pin down the conditions under which such entry is possible and under which anti-elitism can be sustained in a three party system. Finally, we study the conditions under which parties rely on the wisdom of the crowds instead of that of experts, a second common trait of populism.