Policy Reversals: Electoral Competition with Privately Informed Parties
We develop a unidimensional spatial model of two party competition in which parties are better informed than voters about the bliss point of voters. The announced positions of the two parties serve as signals to the voters concerning the parties' private information. Surprisingly, in all separating equilibria the policies implemented by the left-wing party, when it attains power, are to the right of the policies implemented by the right-wing party when it attains power in turn. The driving force behind this result is that, in the event of a shock making right-wing policies more attractive, the incentives pushing the left party to the right are strong, since by winning the election it can avoid the right party implementing extreme policies, while the right-wing party can stay put in a radical stance with the prospect of seeing relatively attractive policies implemented by the rival party.
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