Equilibrium Effects in Campaign Spending Games: Theory and Data

Robert S. Erikson and Thomas Palfrey

No 1006, Working Papers from California Institute of Technology, Division of the Humanities and Social Sciences

Abstract: This paper presents a formal game-theoretic model to explain the simultaneity problem that has made it difficult to obtain unbiased estimates of the effects of both incumbent and challenger spending in U.S. House elections. The model predicts a particular form of correlation between the expected closeness of the race and the level of spending by both candidates, which implies that the simultaneity problem should not be present in close races, and should be progressively more severe in range of safe races that are empirically observed. This is confirmed by comparing simple OLS regression of races that are expected to be close with races that are expected not to be close, using House incumbent races spanning two decades. The theory also implies that inclusion of a variable controlling for total spending should successfully produce reliable estimates using OLS. This is confirmed.

Keywords: campaign spending; game theory; elections; incumbency (search for similar items in EconPapers)
Pages: 17 pages
Date: 1997-05
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Published: Published in American Political Science Review, 2000, V94, #3, pp. 595-609

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