STOCHASTIC DYNAMIC PROGRAMMING FOR ELECTION TIMING: A GAME THEORY APPROACH

Dharma Lesmono () and Elliot Tonkes
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Dharma Lesmono: Department of Mathematics and, Advanced Computational Modelling Centre (ACMC), The University of Queensland, Brisbane Qld 4072, Australia;
Elliot Tonkes: CS Energy Ltd., GPO Box 769, Brisbane Qld 4001, Australia

Asia-Pacific Journal of Operational Research (APJOR), 2006, vol. 23, issue 03, 287-309

Abstract: In this paper, we consider dynamic programming for the election timing in the majoritarian parliamentary system such as in Australia, where the government has a constitutional right to call an early election. This right can give the government an advantage to remain in power for as long as possible by calling an election, when its popularity is high. On the other hand, the opposition's natural objective is to gain power, and it will apply controls termed as "boosts" to reduce the chance of the government being re-elected by introducing policy and economic responses. In this paper, we explore equilibrium solutions to the government, and the opposition strategies in a political game using stochastic dynamic programming. Results are given in terms of the expected remaining life in power, call and boost probabilities at each time at any level of popularity.

Keywords: Game theory; dynamic programming; Stochastic Differential Equation (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:23:y:2006:i:03:n:s0217595906000942

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DOI: 10.1142/S0217595906000942

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