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Campaign War Chests, Entry Deterrence, and Voter Rationality


  • Dhammika Dharmapala


It is often claimed that the accumulation of "war chests" by incumbents deters entry by high-quality challengers in Congressional elections. This paper presents a game-theoretic analysis of the interaction between an incumbent, potential challengers, an interest group, and a representative (rational) voter, where the incumbent's "quality" (or "legislative effectiveness") is known to the interest group, but not to the voter or to potential challengers. Under certain conditions, a perfectly revealing equilibrium exists; the incumbent signals her quality by raising funds from the interest group to accumulate a war chest. The entry deterrence effect thus operates solely through the role of war chests in signaling incumbent quality. Copyright Blackwell Publishers Ltd 2002.

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  • Dhammika Dharmapala, 2002. "Campaign War Chests, Entry Deterrence, and Voter Rationality," Economics and Politics, Wiley Blackwell, vol. 14(3), pages 325-350, November.
  • Handle: RePEc:bla:ecopol:v:14:y:2002:i:3:p:325-350

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    Cited by:

    1. Sivan Frenkel, 2014. "Competence and ambiguity in electoral competition," Public Choice, Springer, vol. 159(1), pages 219-234, April.

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