Events

This paper models how asymmetric information and the strategic selection of policies can undermine trust and lead to disagreement. We model two actors who jointly choose a policy. The tension is that one actor, the proposer, is better informed about which policies are viable and their consequences. The responder may lack the expertise to evaluate proposals and has to decide whether to trust the proposer. We characterize how the proposer’s flexibility influences the responder’s willingness to trust her. Although greater flexibility raises the likelihood of mutually beneficial options, it also raises the specter of \textit{cherry picking}: the proposer exploiting her informational advantage by selecting policies that favor her at the responder’s expense. This fear is so powerful that in the unique equilibrium, the proposer frequently selects mutually beneficial policies, yet the responder continues to reject, rationally guarding against cherry picking. The strategic selection of policies foments suspicion, generating disagreements even when Pareto improvements are available and proposed.