Dynamic dilemma of political trust

Abstract While special interest politics has been shown to undermine political trust, less is known about how political trust influences special interest politics. We construct a static electoral competition model in which candidates propose policy platforms and an interest group determines the level of campaign contributions. We show that a high level of trust in politicians allows the interest group to capture politicians during elections, creating a dynamic dilemma of political trust. Extending the model to a dynamic framework with short-lived players, we find that this dilemma can lead to cycles of political trust and special interest politics: political trust is accumulated, consumed, and then restored, following cycles of special interest politics. (JEL D72, D73, D83).