Nash Equilibrium and Party Polarization in an Electoral Competition Model

Shino Takayama (), Yuki Tamura and Terence Yeo
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Terence Yeo: School of Economics, The University of Queensland, https://economics.uq.edu.au

No 575, Discussion Papers Series from University of Queensland, School of Economics

Abstract: We study the existence problem of Nash equilibrium as well as party polarization in an electoral competition model. In our model, political parties also value holding office (office rent) in addition to maximizing their party members’ utility. A class of models with an uncertainty about the median voter position has been increasingly important and Drouvelis, Saporiti and Vriend (2014) present an experimental study to support a model with office rent. But the inclusion of office rent renders the payoff of each party discontinuous. This makes it difficult to apply a usual fixed point argument to prove the existence of Nash equilibrium. By using a recently developed concept, C-security in McLennan, Monteiro and Tourky (2011), we provide conditions under which a pure strategy Nash equilibrium (PSE) or a mixed strategy Nash equilibrium (MSE) exists within a fairly general setting, and further the analysis by presenting conditions under which various types of policy choices, including polarization, arise in equilibrium.

Keywords: Noncooperative games; electoral competition; existence of equilibrium (search for similar items in EconPapers)
Date: 2016-12-22
New Economics Papers: this item is included in nep-cdm, nep-gth, nep-hpe and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:575

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