Dynamic Electoral Competition with Voter Loss-Aversion and Imperfect Recall

Ben Lockwood, Minh Le and James Rockey
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Ben Lockwood: University of Warwick
Minh Le: University of Warwick

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: This paper explores the implications of voter loss-aversion and imperfect recall for the dynamics of electoral competition in a simple Downsian model of repeated elections. We first establish a benchmark result: when the voters’ reference point is forward-looking, there are a continuum of rational expectations equilibria (REE). When voters are backward-looking i.e. the reference point is last period’s recalled policy, interesting dynamics only emerge when voters have imperfect recall about that policy. Then, the interplay between the median voter’s reference point and political parties’ choice of platforms generates a dynamic process of polarization (or de-polarization). Under the assumption that parties are risk-neutral, platforms monotonically converge over time to a long-run equilibrium, which is always a REE. When parties are risk-averse, dynamic incentives also come into play, and generally lead to more policy moderation, resulting in equilibria that are more moderate than the most moderate REE JEL Classification: D72 ; D81

Keywords: electoral competition; repeated elections; loss-aversion; imperfect recall; advantage (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ban, nep-cdm, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Dynamic electoral competition with voter loss-aversion and imperfect recall (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1399

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