Quarterly Journal of Political Science > Vol 14 > Issue 2

A Behavioral Foundation for Audience Costs

Avidit Acharya, Stanford University, USA, avidit@stanford.edu , Edoardo Grillo, Collegio Carlo Alberto, Italy, edoardo.grillo@carloalberto.org
Suggested Citation
Avidit Acharya and Edoardo Grillo (2019), "A Behavioral Foundation for Audience Costs", Quarterly Journal of Political Science: Vol. 14: No. 2, pp 159-190. http://dx.doi.org/10.1561/100.00017124

Publication Date: 10 Apr 2019
© 2019 A. Acharya and E. Grillo
Crisis bargainingaudience costsreference-dependent utility


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In this article:
Proof of Proposition 1 
Alternative Updating Rules 
Prospective Voting 


We provide a behavioral foundation for audience costs by augmenting the canonical crisis bargaining model with voters who evaluate material outcomes relative to an endogenous reference point. Voters are more likely to re-elect their leader when their payoff is higher than this reference point, and they are more likely to replace him when it is lower. Backing down after a challenge may be politically costly to the leader because initiating the challenge has the potential to raise voters' expectations about their final payoff, creating the possibility that they suffer a payoff loss from disappointment when the leader backs down. Whether it is costly or beneficial to back down after a challenge (and just how costly or beneficial it is) depends on the reference point, which is determined in equilibrium.