Vote buying and campaign promises

What explains the wide variation across countries in the use of vote buying and policy promises during election campaigns? We address this question, and account for a number of stylized facts and apparent anomalies regarding vote buying, using a model in which parties cannot fully commit to campaign promises. We find that high vote buying is associated with frequent reneging on campaign promises, strong electoral competition, and high policy rents. Frequent reneging and low party competence reduce campaign promises. If vote buying can be financed out of public resources, incumbents buy more votes and enjoy an electoral advantage, but they also promise more public goods. Vote buying has distributional consequences: voters targeted with vote buying pre-election may receive no government benefits post-election. The results point to obstacles to the democratic transition from clientelist to programmatic forms of electoral competition: parties may not benefit electorally from institutions that increase commitment.     

MISINFORMATION*

A candidate for political office has private information about his and his rival’s qualifications. A more informative positive (negative) campaign generates a more accurate public signal about his own (his rival’s) qualifications, but costs more. A high type candidate has a comparative advantage in negative campaigns if, relative to the low type, he can lower the voter’s belief about his rival more effectively than he can raise her belief about himself and vice versa. In equilibrium, this comparative advantage determines whether the high type chooses a positive or negative campaign. Further, competition helps the high type separate.     

EXTREMIST PLATFORMS: POLITICAL CONSEQUENCES OF PROFIT-SEEKING MEDIA

We analyze how information about candidate quality affects the choice of electoral platforms made by an office-motivated political challenger. The incumbent is of known quality and located at the ideal policy of the voter. The voter cares for both policy and the candidates' quality and can learn about the challenger's quality by buying information. A high-quality challenger then has an incentive to signal her quality by choosing a policy that induces the voter to buy information. We first study the benchmark case in which the information is supplied exogenously, and its quality is independent of the challenger's platform; this yields multiple equilibria and indeterminacy of equilibrium platforms. By contrast, when the information is supplied by a profit-maximizing media outlet, its quality depends on the challenger's platform and we obtain a unique equilibrium platform. In particular, when the incumbent's quality is relatively low, the media coverage rises and the challenger's platform diverges further from the voter's ideal policy as the voter's preference for quality increases.     

Strategic Transparency and Electoral Pressure

This paper investigates how an office‐motivated incumbent can use transparency enhancement on public spending to signal his budgetary management ability and win re‐election. We show that, when the incumbent faces a popular challenger, transparency policy can be an effective signaling device. It is also shown that electoral pressure can have a nonmonotonic effect on transparency, but a higher electoral pressure always increases the informativeness of signaling and the voter's utility.     

Political Motivations

Are politicians motivated by policy outcomes or by the perks of office? To shed light on this important question, I develop a simple model of two candidate electoral competitions in which candidates may be either office or policy motivated . In a second departure from standard formulations, the model incorporates both campaign and post-election behaviour of candidates. In this environment, I find that office-motivated candidates are favoured in electoral competition but that their advantage is limited by the electoral mechanism itself and policy-motivated candidates win a significant fraction of elections. More importantly, I show that the competitive interaction among candidates of different motivations affects the incentives of all candidates—both office and policy motivated—and that this competition affects policy outcomes. I also extend the model to explore the decision of citizens to enter politics and show that in all equilibria policy-motivated citizens compose a majority of the candidate pool.     

THE REVELATION OF INFORMATION THROUGH THE ELECTORAL PROCESS: AN EXPLORATORY ANALYSIS*

This paper investigates the incentives for candidates to make informative campaign speeches concerning their policy intentions. Electoral competition is modeled as a game of communication in which candidates’policy preferences are private information and they compete by making pre-electoral policy announcements. An equilibrium is shown to exist in which candidates reveal their true policy intentions. We find that campaign messages are more likely to be informative, the less powerful is the elected office, the more attractive are candidates’opportunities outside of office, and the more uniform are candidates’prior beliefs as to the median voter's preferred policy.     

Impact of electoral competition,swing voters and interest groups on equilibrium policy platforms: Exploring the strategic forces at work

This paper constructs a stylized model of election between two opportunistic candidates who can influence equilibrium policy platforms in exchange for monetary contributions provided by two distinct lobby groups. Two key features are embedded which give rise to a dual uncertainty in the model: the existence of partisan spread across voter groups as well as the embezzlement of campaign funds received by the electoral candidates from the interest groups. We derive and compare the equilibrium platforms of the two office-seeking candidates in three scenarios: none of the above uncertainties exist (benchmark case), only uncertainty about voters’ preferences exist (swing-voter case), and both the uncertainties exist (swing voters and lobby groups case). We find that an opportunistic candidate’s swing-voter tax platform is always lower than the benchmark tax platform. Additionally, the equilibrium tax choice of electoral contenders in the swing voters and opposing lobby groups case is found to be greater than the tax level chosen under the swing-voter case if the lobby group advocating a greater level of tax is sufficiently well-organized such that it outweighs the relative swing-voter effect in that group. Furthermore, we find that when an electoral candidate transitions from being highly corrupt to becoming relatively more honest, the equilibrium level of public good provision adjusts in conformity with the well-organized group’s economic preferences. Finally, if the strength of relative lobbying effect is weaker, a lower partisan bias within that group induces an electoral candidate to choose a tax platform closer to that group’s policy bliss point.     

Last Minute Policies and the Incumbency Advantage

This paper models a purely informational mechanism behind the incumbency advantage. In a two‐period electoral campaign with two policy issues, an incumbent and a possibly more competent challenger compete for election by voters who are heterogeneously informed about the state of the world. Due to the asymmetries in government responsibility between candidates, the incumbent's statement may convey information on the relevance of the issues to voters. In equilibrium, the incumbent sometimes strategically releases his statement early and thus signals the importance of his signature issue to the voters. We find that, since the incumbent's positioning on the issue reveals private information which the challenger can use in later statements, the incumbent's incentives to distort the campaign are decreasing in his quality, as previously documented by the empirical literature. The distortions arising in equilibrium are decreasing in the incumbent's true competence; however, the distortions may be increasing in the incumbent's expected competence on his signature issue.     

Tying the politicians’ hands: The optimal limits to representative democracy

The citizen candidate models of democracy assume that politicians have their own preferences that are not fully revealed at the time of elections. We study the optimal delegation problem which arises between the median voter (the writer of the constitution) and the (future) incumbent politician under the assumption that not only the state of the world but also the politician's type (preferred policy) are the policy‐maker's private information. We show that it is optimal to tie the hands of the politician by imposing both a policy floor and a policy cap and delegating him/her the policy choice only in between the cap and the floor. The delegation interval is shown to be the smaller the greater is the uncertainty about the politician's type. These results are also applicable to settings outside the specific problem that our model addresses.     

Chasing votes with the public budget

This paper examines the distribution of public resources by an incumbent seeking re-election. I present a model to explain the behavior of an incumbent redistributing public goods and cash transfers. According to the model, politicians use the government budget as a portfolio for electoral investment and diversify expenditure in order to target different groups of voters at the same time. I construct a unique data set of the promises made by the president of Colombia from 2002 to 2010 to municipalities throughout the country's various regions. The empirical results show some evidence that promises of cash transfers targeted swing voters, promises of public goods simultaneously targeted both core and swing municipalities, while opposition municipalities received few promises of cash transfers and public goods, which is consistent with the prediction of the model.     

Information Manipulation in Election Campaigns

We provide a game‐theoretical model of manipulative election campaigns with two political candidates and a Bayesian voter. The latter is uncertain about how good the candidates are. Candidates take unobservable, costly actions to manipulate voter's opinion about their positions. We show that if the candidates differ in campaigning efficiency, and the voter receives the biased campaign messages with some noise, then the cost‐efficient candidate can win the election with higher probability than her opponent even when she is ex‐post an inferior choice for the voter. Our paper offers a novel informational justification for imposing limits on campaign spending and encouraging diversity in the supply of political information.     

Partisan and bipartisan gerrymandering

This paper analyzes the optimal partisan and bipartisan gerrymandering policies in a model with electoral competitions in policy positions and transfer promises. Party leaders have both office‐ and policy‐motivations. With complete freedom in redistricting, partisan gerrymandering policy generates the most one‐sidedly biased district profile, while bipartisan gerrymandering generates the most polarized district profile. In contrast, with limited freedom in gerrymandering, both partisan and bipartisan gerrymandering tend to prescribe the same policy.     

Exchange Rate Populism

East Asian and Latin American economies present opposite exchange rate electoral cycles: exchange rates tend to be more depreciated before and appreciated after elections among East Asian economies, while the opposite is true in Latin America. We propose an explanation for these empirical findings where the driving force of the opposite exchange rate populism in these two regions is their difference in the relative size of tradable and non‐tradable sectors, coupled with the distributive effect of exchange rates. In a setup where policy‐makers differ in their preference bias toward non‐tradable and tradable sectors, the exchange rate is used a noisy signal of the incumbent's type in an uncertain economic environment. The mechanism behind the cycle is engendered by the incumbent trying to signal he is median voter's type, biasing his policy in favor of the majority of the population before elections.     

TWO POLITICIANS,A PAC,AND HOW THEY INTERACT: TWO EXTENSIVE FORM GAMES*

Two sequential games of the interactions among a PAC and two politicians contesting the same office are developed, and their subgame perfect equilibria are characterized. The politicians have distinct ideal points in policy space, and this drives the result that the policy platforms they campaign on are not identical. The PAC always contributes only to the politician whose platform is closest to the PAC's ideal point, who is the politician whose ideal point is closest to the PAC's ideal point; as a result, both politicians’policy platforms are closer to the PAC's ideal point. The sequence of play does not qualitatively affect the outcome, but the PAC has a second mover advantage. Exogenous shocks to the probabilities of winning only modify the basic outcome.     

Long‐term care and intrafamily moral hazard: Optimal public policy

The paper studies optimal public long‐term care (LTC) policy in the context of intrafamily moral hazard suggested by Pauly. The model considers a representative family consisting of an adult child and her elderly parent who might become dependent, in which case he places a special value on the LTC provided to him by his child. Since the child's caregiving is decreasing in the amount of insurance coverage, the parent prefers to underinsure, which is socially suboptimal. The child's choice of caregiving is also inefficient since she does not internalize its positive effect on the parent. The paper tackles these inefficiencies and shows that intrafamily moral hazard is a sufficient justification for public intervention targeted at insurance. If not necessarily for the introduction of mandatory public insurance, then at least for the taxation or subsidization of private insurance premiums.     

CONTRIBUTIONS AND ELECTIONS WITH NETWORK EXTERNALITIES

This paper develops a model of campaign contributions and electoral competition. Contributors have separable preferences over policy and the electoral success of the candidate they support, as in influence buying. Policy preferences are single peaked over a single policy dimension. A candidate's chances of victory are increasing in the relative size of her war chest. In equilibrium, potential contributors balance incentives to donate to a candidate that is desirable on policy grounds and ensuring that they back the likely winner. With exogenous candidate positions, we find conditions under which, in equilibrium, contributors donate to the candidate that is less desirable on policy grounds solely because they consider the candidate viable . We also find that there is a degree of indeterminacy, wherein multiple equilibria inducing different lotteries over the final policy often exist. With endogenous candidate locations, we find that while median policies are always supportable as equilibrium, it is often the case that any pair of candidate locations is supportable in equilibrium. These results suggest that in settings with substantial influence buying, median policy interests may not be represented.     

Electoral competition with privately-informed candidates

This paper formulates and analyzes a general model of elections in which candidates receive private signals about voters' preferences prior to committing to political platforms. We fully characterize the unique pure-strategy equilibrium: After receiving her signal, each candidate locates at the median of the distribution of the median voter's location, conditional on the other candidate receiving the same signal. Sufficient conditions for the existence of pure strategy equilibrium are provided. Though the electoral game exhibits discontinuous payoffs for the candidates, we prove that mixed strategy equilibria exist generally, that equilibrium expected payoffs are continuous in the parameters of the model, and that mixed strategy equilibria are upper hemicontinuous. This allows us to study the robustness of the median voter theorem to private information: Pure strategy equilibria may fail to exist in models “close” to the Downsian model, but mixed strategy equilibria must, and they will be “close” to the Downsian equilibrium.     

Public Funding of Political Parties

This paper studies the typical European system for public funding of parties, where parties receive public funds depending on their vote share. These funds finance electoral campaigns. It is shown that such a funding system increases policy convergence. The effect is larger, the more funding depends on vote shares. If the parties have access to other means of campaign finance given in a lump‐sum way, the effect is moderated.     

Rationalizing the Political Business Cycle: A Workhorse Model

An incumbent policymaker has incentives to expand the money supply prior to elections to stimulate the economy and thereby further her chances of re-election. In its original formulation, the Nordhaus political business cycle hypothesis relies on adaptive inflation expectations and naive retrospective voting.
This article develops a simple model of a political cycle in inflation and output growth, assuming rational inflation expectations and rational retrospective voting. Voter scrutiny of the incumbent's economic performance has policy and selection effects, with ambiguous consequences for welfare: the policymaker manipulates the money supply for electoral purposes, but an incumbent of above average quality is more likely to remain in office.     

The Political Economy of Tax-Based Incomes Policy: Wealth Effects of Post Keynesian TIP

This paper explores the economics of electoral democracy, an almost entirely neglected subject. Running for office necessitates resources. But students of democracy have had almost nothing to say about how much money should be spent by candidates or where that money should come from. As a result, there is a gaping void in the theory of democracy. Joseph A. Schumpeter used a market analogy in his discussion of the electoral process, but even he did not discuss how electoral campaigns are to be paid for. In fact, the few citizens who largely fund campaigns for office in the United States purchase non-rivalrous influence. They obtain the ability to shape the policies that affect all citizens. In this way, political equality is undermined. The paper concludes that achieving a more representative political system can best be attained by treating political campaigns as a public good.