Inefficient Policies and Incumbency Advantage
AbstractWe study incumbency advantage in a dynamic game with incomplete information between an incumbent and a voter. The incumbent knows the true state of the world, e.g., the severity of an economic recession or the level of criminal activities, and can choose the quality of his policy. This quality and the state of the world determine the policy outcome, i.e., the economic growth rate or the number of crimes committed. The voter only observes the policy outcome and then decides whether to reelect the incumbent or not. Her preferences are such that she would reelect the incumbent under full information if and only if the state of the world is above a given threshold level. In equilibrium, the incumbent is reelected in more states of the world than he would be under full information. In particular, he chooses ine±cient policies and generates mediocre policy outcomes whenever the voter's induced belief distribution will be such that her expected utility of reelecting the incumbent exceeds her expected utility of electing the opposition candidate. Hence, there is an incumbency advantage through ine±cient policies. We provide empirical evidence consistent with the prediction that reelection concerns may induce incumbents to generate mediocre outcomes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 996.
Length: 46 pages
Date of creation: 2007
Date of revision:
Contact details of provider:
Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
Phone: +61 3 8344 5289
Fax: +61 3 8344 6899
Web page: http://www.economics.unimelb.edu.au
More information through EDIRC
Elections; Incumbency Advantage; Political Economics;
Other versions of this item:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-30 (All new papers)
- NEP-CDM-2007-06-30 (Collective Decision-Making)
- NEP-POL-2007-06-30 (Positive Political Economics)
- NEP-UPT-2007-06-30 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rogoff, Kenneth & Sibert, Anne, 1988.
"Elections and Macroeconomic Policy Cycles,"
Review of Economic Studies,
Wiley Blackwell, vol. 55(1), pages 1-16, January.
- Cukierman, A. & Tommasi, M., 1997.
"When Does It Take a Nixon to Go to China,"
30-97, Tel Aviv.
- Alberto Alesina & Alex Cukierman, 1987.
"The Politics of Ambiguity,"
NBER Working Papers
2468, National Bureau of Economic Research, Inc.
- Wolfers, Justin & Zitzewitz, Eric, 2004.
"Experimental Political Betting Markets and the 2004 Election,"
- Wolfers Justin & Zitzewitz Eric, 2004. "Experimental Political Betting Markets and the 2004 Election," The Economists' Voice, De Gruyter, vol. 1(2), pages 1-8, October.
- Brender, Adi & Drazen, Allan, 2005.
"Political budget cycles in new versus established democracies,"
Journal of Monetary Economics,
Elsevier, vol. 52(7), pages 1271-1295, October.
- Adi Brender & Allan Drazen, 2004. "Political Budget Cycles in New versus Established Democracies," NBER Working Papers 10539, National Bureau of Economic Research, Inc.
- Grossman, Sanford J. & Perry, Motty, 1986. "Perfect sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 39(1), pages 97-119, June.
- Cox, Gary W. & Katz, Jonathan N., 1995. "Why Did The Incumbency Advantage In U.S. House Elections Grow?," Working Papers 939, California Institute of Technology, Division of the Humanities and Social Sciences.
- Gregory D. Hess & Athanasios Orphanides, 2001.
"War and Democracy,"
Journal of Political Economy,
University of Chicago Press, vol. 109(4), pages 776-810, August.
- Dornbusch, Rudiger & Edwards, Sebastian, 1990. "Macroeconomic populism," Journal of Development Economics, Elsevier, vol. 32(2), pages 247-277, April.
- Joseph M. Johnson & W. Mark Crain, 2004. "Effects of Term Limits on Fiscal Performance: Evidence from Democratic Nations," Public Choice, Springer, vol. 119(1_2), pages 73-90, 04.
- Kenneth Rogoff, 1990.
"Equilibrium Political Budget Cycles,"
NBER Working Papers
2428, National Bureau of Economic Research, Inc.
- Alesina, Alberto & Tabellini, Guido, 1990.
"A Positive Theory of Fiscal Deficits and Government Debt,"
Review of Economic Studies,
Wiley Blackwell, vol. 57(3), pages 403-14, July.
- Tabellini, Guido & Alesina, Alberto, 1990. "A Positive Theory of Fiscal Deficits and Government Debt," Scholarly Articles 3612769, Harvard University Department of Economics.
- Claude Berrebi & Esteban Klor, 2004.
"On Terrorism and Electoral Outcomes: Theory and Evidence from the Israeli-Palestinian Conflict,"
859, Princeton University, Department of Economics, Industrial Relations Section..
- Claude Berrebi & Esteban F. Klor, 2004. "On Terrorism and Electoral Outcomes: Theory and Evidence from the Israeli-Palestinian Conflict," Working Papers 4, Princeton University, Department of Economics, Industrial Relations Section..
- Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
- Besley, Timothy, 2007. "Principled Agents?: The Political Economy of Good Government," OUP Catalogue, Oxford University Press, number 9780199283910.
- Robert J. Blendon, 1997. "Bridging the Gap between the Public's and Economists' Views of the Economy," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 105-118, Summer.
- Hess, Gregory D & Orphanides, Athanasios, 1995. "War Politics: An Economic, Rational-Voter Framework," American Economic Review, American Economic Association, vol. 85(4), pages 828-46, September.
- Carmen Bevi� & Humberto Llavador, 2009.
"The Informational Value of Incumbency,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 11(5), pages 773-796, October.
- Humberto Llavador & Carmen Beviá, 2006. "The informational value of incumbency," Economics Working Papers 962, Department of Economics and Business, Universitat Pompeu Fabra.
- Carmen Bevia & Humberto Llavador, 2006. "The Informational Value of Incumbency," Working Papers 276, Barcelona Graduate School of Economics.
- Carmen Bevi? & Humberto Llavador, 2006. "The Informational Value of Incumbency," UFAE and IAE Working Papers 662.06, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Beck, T.H.L. & Clarke, G. & Groff, A. & Keefer , P. & Walsh, P., 2001. "New tools in comparative political economy: The database of political institutions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125517, Tilburg University.
- Arnaud Dellis, 2009. "The Salient Issue of Issue Salience," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(2), pages 203-231, 04.
- Shi, Min & Svensson, Jakob, 2006. "Political budget cycles: Do they differ across countries and why?," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1367-1389, September.
- Roland Hodler & Simon Loertscher & Dominic Rohner, 2007. "False Alarm? Terror Alerts and Reelection," Department of Economics - Working Papers Series 995, The University of Melbourne.
- Roland Hodler & Simon Loertscher & Dominic Rohner, 2010.
"Biased Experts, Costly Lies, and Binary Decisions,"
10.01, Swiss National Bank, Study Center Gerzensee.
- Elena Manzoni & Stefan P. Penczynski, 2013.
"Last minute policies and the incumbency advantage,"
229, University of Milano-Bicocca, Department of Economics, revised Jan 2013.
- Jo Thori Lind & Dominic Rohner, 2011.
"Knowledge is Power - A Theory of Information, Income, and Welfare Spending,"
CESifo Working Paper Series
3613, CESifo Group Munich.
- Lind, J.T. & Rohner, D., 2011. "Knowledge is power: A theory of information, income and welfare spending," Cambridge Working Papers in Economics 1161, Faculty of Economics, University of Cambridge.
- Lind, Jo Thori & Rhoner, Dominic, 2011. "Knowledge is Power: A Theory of Information, Income, and Welfare Spending," Memorandum 26/2011, Oslo University, Department of Economics.
- Jo Thori Lind & Dominic Rohner, 2013. "Knowledge is power - A theory of information, income, and welfare spending," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 13.07, Université de Lausanne, Faculté des HEC, DEEP.
- Jo Thori Lind & Dominic Rohner, 2011. "Knowledge is power: a theory of information, income, and welfare spending," ECON - Working Papers 036, Department of Economics - University of Zurich.
- Roland Hodler, 2011. "Elections and the strategic use of budget deficits," Public Choice, Springer, vol. 148(1), pages 149-161, July.
- Mark Schelker, 2011.
"Lame Ducks and Divided Government: How Voters Control the Unaccountable,"
CESifo Working Paper Series
3523, CESifo Group Munich.
- Schelker, Mark, 2011. "Lame Ducks and Divided Government: How Voters Control the Unaccountable," Economics Working Paper Series 1130, University of St. Gallen, School of Economics and Political Science, revised Mar 2012.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marisa Cerantola).
If references are entirely missing, you can add them using this form.