A Reputational Theory of Two Party Competition
AbstractWe study a dynamic game of incomplete information in which two political parties contest elections with endogenously formed reputations regarding the preferences that prevail within each party. Party preferences exhibit serial correlation and change with higher probability following defeat in elections. We show that when partisans care sufficiently about office, extreme policies are pursued with positive probability by the government if the ruling party is perceived relatively more extreme than the opposition. In equilibrium such policies occur when (a) both parties are perceived to be more extreme than a fixed benchmark level, and (b) elections are close in that both parties have similar reputations. Two qualitatively different equilibrium dynamics are possible depending on the relative speed with which preferences of parties in government or in the opposition change: One produces regular government turnover and extreme policies along the path of play, another involves a strong incumbency advantage and policy moderation.
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Bibliographic InfoPaper provided by University of Rochester - Wallis Institute of Political Economy in its series Wallis Working Papers with number WP57.
Length: 44 pages
Date of creation: Jul 2008
Date of revision:
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Postal: University of Rochester, Wallis Institute, Harkness 109B Rochester, New York 14627 U.S.A.
Other versions of this item:
- Kalandrakis, Tasos, 2009. "A Reputational Theory of Two-Party Competition," International Quarterly Journal of Political Science, now publishers, vol. 4(4), pages 343-378, December.
- NEP-ALL-2009-01-24 (All new papers)
- NEP-CDM-2009-01-24 (Collective Decision-Making)
- NEP-ORE-2009-01-24 (Operations Research)
- NEP-POL-2009-01-24 (Positive Political Economics)
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