Cognitive Dissonance and Consensus Formation around Public Projects

Recently, in order to realize a consensus formation around a public project, some institutional designs have been introduced, where a lot of stakeholders communicate each other before undertaking the project and participate in the decision-making processes. In this paper, a subjective bargaining game is presented to investigate communication processes, where a government and an individual discuss which alternative should be chosen for the public project, while they describe the problem by different cognitive frames. The model shows that communication failures caused by cognitive dissonance among the two agents prevent the desirable consensus formation around the project. Finally, alternative solutions to overcome the cognitive dissonance are discussed.