Privately informed parties and policy divergence
AbstractThis paper presents a Downsian model of political competition in which parties have incomplete but richer information than voters on policy effects. Each party can observe a private signal of the policy effects, while voters cannot. In this setting, voters infer the policy effects from the party platforms. In this political game with private information, we show that there exist weak perfect Bayesian equilibria (WPBEs) at which the parties play different strategies, and thus, announce different platforms even when their signals coincide. This result is in contrast with the conclusion of the Median Voter Theorem in the classical Downsian model. Our equilibrium analysis suggests similarity between the set of WPBEs in this model and the set of uniformly perfect equilibria of Harsanyi and Selten (1988) in the model with completely informed parties which we studied in a previous paper (Kikuchi, 2010).
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Bibliographic InfoPaper provided by Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University in its series CCES Discussion Paper Series with number 40.
Length: 13 p.
Date of creation: Jan 2011
Date of revision:
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- Heidhues, Paul & Lagerlof, Johan, 2003.
"Hiding information in electoral competition,"
Games and Economic Behavior,
Elsevier, vol. 42(1), pages 48-74, January.
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