 A Reputational Theory of Two Party CompetitionNo WP57, Wallis Working Papers from University of Rochester - Wallis Institute of Political Economy Abstract: We 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. Pages: 44 pages Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:roc:wallis:wp57 Access Statistics for this paper More papers in Wallis Working Papers from University of Rochester - Wallis Institute of Political Economy University of Rochester, Wallis Institute, Harkness 109B Rochester, New York 14627 U.S.A.. Contact information at EDIRC. |
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