A NOTE ON NEGATIVE ELECTORAL ADVERTISING: DENIGRATING CHARACTER VS. PORTRAYING EXTREMISM

In this expository note, we extend the model of Harrington and Hess (1996) by incorporating valence advertising. There is a two‐candidate electoral contest. Candidates inherit a certain position indicating their ideological platform in an unidimensional policy space. They also inherit a certain valence index which is a comprehensive term for personal traits that are desirable to all voters such as integrity. The candidates can subsequently influence these using negative advertising with regard to both ideological and valence factors. We find that when the available resources are sufficiently small and certain reasonable assumptions are fulfilled, the candidate with the higher initial valence index will run a relatively personal campaign while the candidate with the lower initial valence index will run an ideological campaign.     

Partisan politics and election failure with ignorant voters

We analyze candidate competition when some voters do not observe a candidate's policy choice. Voters have a personality preference when both candidates offer the same policy. In equilibrium, the candidate with a personality advantage may get elected with a partisan policy even though his opponent's policy is preferred by all voters. The departure from the Downsian prediction is most pronounced when candidates have a weak policy preference and care mostly about winning the election. In that case, uninformed voters choose the candidate with the preferred personality even if electing this candidate implies a lower payoff on average.     

The swing voter's curse with adversarial preferences

We analyze voting behavior in a large electorate in which voters have adversarial state-contingent preferences with incomplete information about the state of the world. We show that one type of voter can suffer from the swing voter's curse à la Feddersen and Pesendorfer [The swing voter's curse, Amer. Econ. Rev. 86 (1996) 408-424], and go on to characterize the symmetric Nash equilibria of this model under different parameter values. We prove that unlike settings with nonadversarial preferences, there are equilibria in which in one state of the world, a minority-preferred candidate almost surely wins the election and thus the election may fail to correctly aggregate information. Indeed, we show that the fraction of the electorate dissatisfied with the result can be as large as .     

Believers vs. deniers: Climate change and environmental policy polarization

This paper theoretically studies the consequences of partisanship with an application to environmental policy. We model an election between a right-wing and a left-wing candidate who strategically propose environmental policies to gain the support of an electorate divided based on their climate change beliefs and productive assets. While environmental regulations imply a trade-off between a more sustainable environment and higher incomes for all voters, climate change believers have a higher belief in human activity-induced climate change, which translates into greater expected environmental benefits from policy, and high-asset voters care relatively more about mitigating economic costs. Voters view the left-wing candidate as more effective in addressing environmental challenges, whereas her right-wing opponent is the better candidate to deliver relief from the economic burden of regulations. In equilibrium, there exists policy divergence and the right-wing candidate always proposes the more pro-industry policy. We find that higher asset inequality moves equilibrium policies in a pro-industry direction as long as high-asset voters are ideologically more homogeneous than low-asset ones. Equilibrium policies become further polarized with greater partisanship as those voters with the same climate change belief hold similar ideologies.     

The fragility of information aggregation in large elections

In a common-values election where voters receive a signal about which candidate is superior, suppose there is a small amount of uncertainty about the conditional likelihood of the signal?s outcome, given the correct candidate. Once this uncertainty is resolved, the signal is i.i.d. across agents. Information can then fail to aggregate. The candidate less likely to be correct given agents? signals can be elected with probability near 1 in a large electorate even if the distribution of signal likelihoods is arbitrarily near to a classical model where agents are certain that a particular likelihood obtains given that a specific candidate is correct.     

Candidate strategies in primaries and general elections with candidates of heterogeneous quality

I consider a model in which candidates of differing quality must win a primary election to compete in the general election. I show that there is an equilibrium in which Democrats choose liberal policies and Republicans choose conservative policies, but higher quality candidates choose more moderate policies than lower quality candidates. In this equilibrium, higher quality candidates choose more moderate policies if they have a larger quality advantage or there is less uncertainty about the median voterʼs ideal point in the general election, and the candidates in a given primary choose closer policies to one another when there is a smaller quality difference between the candidates in a primary. I further show that if the candidates have policy motivations, then a low quality candidate may strategically choose to enter a primary even if running for office is costly and the candidate will lose the primary election with certainty in equilibrium.     

Manipulation through political endorsements

We study elections with three candidates under plurality voting. A candidate is a Condorcet loser if the majority of the voters place that candidate at the bottom of their preference rankings. We first show that a Condorcet loser might win the election in a three-way race. Next we introduce to the model an endorser who has private information about the true probability distribution of the preferences of the voters. Observable endorsements facilitate coordination among voters who may otherwise split their votes and lead to the victory of the Condorcet loser. When the endorser has an ideological bias towards one of the candidates, the coordination impact of endorsements remains unaltered, moreover the endorser successfully manipulates the outcome of the election in favor of his bias, even if his ideological bias is known by the voters. The results are true for any endorsement cost and any magnitude of bias as long as the electorate is large enough.     

Pivots versus signals in elections

We consider a two-period model of elections in which voters have private information about their policy preferences. A first-period vote can have two types of consequences: it may be pivotal in the first election and it provides a signal that affects candidates' positions in the second election. Pivot events are exceedingly unlikely, but when they occur the effect of a single vote is enormous. In contrast, vote totals always have some signaling effect, but the effect of a single vote is small. We investigate which effect - pivot or signaling - drives equilibrium voting behavior in large electorates.     

Motivation crowding‐out and green‐paradox‐like outcomes

We analyze the effectiveness of environmental policy in a framework in which households’ utility is determined by both private and social components, representing their extrinsic and intrinsic motivations to undertake green actions, respectively. Environmental policy, in the form of a subsidy aiming to incentivize the adoption of a green technology, on the one hand, directly increases households’ extrinsic motivation, while, on the other hand, indirectly decreases their intrinsic motivation. We show that, provided that the indirect effect dominates, the policy leads to crowding‐out of intrinsic motivation which ultimately undermines the effectiveness of the policy itself. Specifically, despite its positive effect on environmental outcomes in the short run, the policy will lead to a deterioration in long‐run environmental outcomes, giving rise to a reverse green‐paradox‐like outcome. Moreover, even in the case in which the direct effect dominates, provided that the indirect effect is large enough, the policy will generate a deterioration in short‐run environmental outcomes. These results clearly suggest that the optimal design of environmental policy is particularly complicated since it requires to take into account also its effects on intrinsic motivation.     

Policy biases with voters’ uncertainty about the economy and the government

We model policy choices where parties competing for election are better informed than voters about the state of the economy. In addition voters are uncertain about the incumbent's preferences and the median voter's vote potentially depends on the state of the economy. The incumbent may bias his policy in order to convey information to the voters and raise his chance of reelection. The bias depends crucially on which kind of uncertainty is the most important. Uncertainty about preferences leads to moderate policies, while uncertainty about the state of the economy leads to extreme policies.     

A swing state theory of trade protection in the Electoral College

This paper analyzes trade policy determination in the Electoral College in the presence of swing voters. It determines the circumstances under which incumbent politicians have an incentive to build a reputation for protectionism, thus swaying voting decisions and improving their re‐election probability. Strategic trade protection is shown to be more likely when protectionist swing voters have a lead over free trade supporters in states with relatively strong electoral competition and in states representing a larger proportion of Electoral College votes. An empirical test using a measure of industrial concentration in swing and decisive U.S. states lends support to the theoretical findings.     

LOBBYING AND ELECTIONS

I analyse the interaction between post‐election lobbying and the voting decisions of forward‐looking voters. The existing literature has shown that in models with citizen candidates from a dispersed distribution of preferences, lobbying has no influence on implemented policy. In my model with ideological parties, lobbying is shown to have an effect on policy. In terms of welfare, I show that the median voter and the majority of voters can be better off with lobbying.     

Flip-flopping from primaries to general elections

I consider a model in which candidates must win a primary election to compete in the general election. Candidates may choose different policies in the primary and the general election, but doing so results in accusations of flip-flopping. I show that candidates adopt extreme policies in the primaries but then try to move closer to the center for the general election even though primary voters are forward-looking and anticipate this policy moderation. The extent to which candidates move closer to the center is constrained by flip-flopping costs, and candidates choose divergent policies in the general election. I obtain comparative statics results on candidate policy choices in terms of voter preferences.     

The Salient Issue of Issue Salience

This paper proposes a model where the set of issues that are decisive in an election (i.e., the set of salient issues) is endogenous. The model takes into account a key feature of the policy-making process, namely, that the decision-maker faces time and budget constraints that prevent him from addressing all of the issues that are on the agenda. We show that this feature creates a rationale for a policy-motivated decision-maker to manipulate his policy choice in order to influence which issues will be salient in the next election. We identify three motivations for the decision-maker to manipulate his policy choice for salience purposes. One is to make salient an issue on which he has an electoral advantage. A second motivation is to defuse the salience of an issue on which he is electorally weak, which is accomplished by either implicitly committing to a policy outcome or triggering a change of salient issue for the challenger. A third motivation is to induce the opposition party to nominate a candidate who, if elected, will implement a policy that the incumbent decision maker finds more palatable.     

Dynamic Multi‐Activity Contests*

We develop a model of dynamic multi‐activity contests. Players simultaneously choose efforts in long‐run activities, observe each other's efforts in these activities, and then simultaneously choose efforts in short‐run activities. A player's long‐run and short‐run efforts complement each other in determining the player's probability of winning. We compare the outcomes of this two‐stage model to those of the corresponding model in which players choose efforts in all activities simultaneously. Interestingly, effort expenditures are always lower in the sequential multi‐activity contest than in the simultaneous multi‐activity contest. The implications of this result for the organization of military, litigation, innovation, academic, and sporting contests are highlighted.     

The sources of protectionist drift in representative democracies

We analyze a two country-two good model of international trade in which citizens in each country differ by their specific factor endowments. The trade policy in each country is set by the politician who has been elected by the citizens in a previous stage. Due to a delegation effect citizens generally favor candidates who are more protectionist than they are. The one-candidate-per-country equilibria exhibit a “protectionist drift” owing to this delegation effect. In addition, we find an additional source of protectionist drift that we call the “abstention effect”. Not only do candidates wish to delegate to more protectionist colleagues, but these more protectionist colleagues who can win election, prefer still more protectionist candidates than themselves. Therefore, they have an incentive to abstain, that is, not run for election. We show that because of this abstention effect there exists a range of electable citizens all of whom are more protectionist than the median voter's most preferred candidate. We extend the analysis allowing two-candidate equilibria and the possibility that there are costs and benefits of holding office.     

Local equilibrium equivalence in probabilistic voting models

Electoral equilibria depend upon candidates' motivations. Maximization of expected vote share may not lead to the same behavior as maximization of the probability of winning the election. Accordingly, it is desirable to understand when electoral equilibria are insensitive to the choice of candidate motivations. This paper examines sufficient conditions for local equilibrium equivalence between expected vote share maximization and maximization of probability of victory in the spatial model of elections with probabilistic voters.     

A wait‐and‐see approach to investments: Do elections play a role?

Unlike previous studies on electoral investment cycle—the tendency for firms to reduce investment expenditure during an election year relative to nonelection years—that have primarily focused on developed countries, this study documents cycles in private investments in relation to the timing of national elections across a broader set of African countries. The estimation results indicate that during election years, private investment decreases by an average of 16% relative to nonelection years. The results also reveal that private investment falls in the year leading up to an election and increases in the immediate year after an election, consistent with the view that electoral uncertainty deters investments. These findings suggest that electoral investment cycles apply strongly to African countries.     

The Political Cause of the Movement of RMB Exchange Rate：A Research Based on the Spillover Effects of US Political Cycle

Movement of the renminbi (RMB) exchange rate is not only affected by economic factors, but also by political factors home and aboard. This paper analyzes the transmission mechanism of political cycles on the RMB exchange rate first, and then sets up a “political cycle spillover effect model” followed by an empirical analysis. We find that: (1) the US political cycle has a direct effect on the RMB exchange rate in the short run, which is mainly transmitted by capital flows and China’s exchange rate policy control; (2) the RMB exchange rate changes periodically in accordance with the US presidential election and midterm election cycle, with the appreciation ratio significantly lower in the first year of the election cycle, while significantly higher in the year after the midterm election; (3) The effect of the political cycle will not be affected by which party holds power, though it will be affected if the president and parliament are ruled by the same party. This paper not only extends the research of the influencing factors of the RMB exchange rate to the political field, but also sets up a use theoretical model to analyze the impact of political issues on the RMB exchange rate, providing a new perspective to fully understand the external environment of RMB exchange rate reform.     

Do voters demand responsive governments? Evidence from Indian disaster relief

Using rainfall, public relief, and election data from India, we examine how governments respond to adverse shocks and how voters react to these responses. The data show that voters punish the incumbent party for weather events beyond its control. However, fewer voters punish the ruling party when its government responds vigorously to the crisis, indicating that voters reward the government for responding to disasters. We also find evidence suggesting that voters only respond to rainfall and government relief efforts during the year immediately preceding the election. In accordance with these electoral incentives, governments appear to be more generous with disaster relief in election years. These results describe how failures in electoral accountability can lead to suboptimal policy outcomes.