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Political Economy with Many Parties: Strategic Electorate and Strategic Candidates

Periodic Reporting for period 3 - PEMP (Political Economy with Many Parties: Strategic Electorate and Strategic Candidates)

Reporting period: 2018-08-01 to 2020-01-31

The objective of my ERC project “Political Economy with many parties: strategic electorate and strategic candidates” is to foster our knowledge of the strategic behavior of candidates and the electorate in multicandidate elections.
Concretely, this project has two main goals: (i) generate new methodological tools to analyze the behavior of candidates and the electorate in multicandidate elections, and (ii) use those tools to generate new knowledge about the properties of political institutions. To achieve these goals, I divided the project in three inter-related components, each focusing on different dimensions of the issue at hand.
Component 1 focuses on the strategic behavior of voters. The specific objectives are: (i) to develop a more realistic theoretical model of strategic voting; (ii) to test through laboratory experiments the (relative) soundness of this new model; (iii) to study the strategic behavior of voters under different electoral systems, and the properties of these systems.
Component 2 focuses on electoral campaign contributions in multicandidate elections. The main methodological challenge is to develop a tractable model of campaign contributions in multicandidate elections.
Component 3 jointly studies the strategic behavior of candidates and of the electorate. The main methodological challenge of this component is to develop a model, sufficiently simple to be used in many institutional setups, but sufficiently sophisticated to capture the subtleties of the strategic interactions within the electorate, among candidates, and between candidates and the electorate.

We have made significant progress on the three components of the project. The work performed resulted in 11 working papers, 3 already published and 1 at the revised and resubmitted stage in an international peer-reviewed journal. We also made progress on some other subprojects but they have not yet been turned into working papers. Members of the team have been invited to present those papers at conferences, workshops, and seminars. Last but not least, we organized a two-day conference in Brussels in June 2017.
Component 1
Voter rationality has been at the center of a heated debate for decades. Its detractors attack this modelling approach on the grounds that some central predictions of the rational voter model are contradicted by the facts. However, recent theoretical advances suggest that the empirically unsound predictions of the rational-voter model could be an artifact of a simplifying assumption: there is no aggregate uncertainty about the distribution of preferences in the electorate. In Bouton, Castanheira, and Llorente-Saguer (2017), we test whether aggregate uncertainty alone may produce a change in voting behavior that is qualitatively important. We adopt a theory-based experimental approach.
Given the lack of consensus around the rational-voter model, various alternative models of voting have been proposed. Among those, the so-called group-based voting models appear quite promising. They predict high turnout level, and produces comparative statics that are empirically sound. Moreover, direct tests of those models are quite conclusive. In Bouton and Ogden (2018), we developed a group-based model of voting in multicandidate elections. We study two of the most-widely used electoral rules around the world: the plurality rule and the majority runoff rule.
To foster our understanding of the strategic behavior of voters, we considered different electoral rules both theoretically and in the laboratory. In Bouton, Gallego, Llorente-Saguer, and Morton (2019), we studied the properties of the majority runoff system and compare them to the ones of plurality rule, in the setup of a divided majority. In work that has not yet been turned into working papers, we studied various other electoral rules, including instant-runoff and cumulative voting.
Component 2
The role of campaign contributions in elections is a central issue in democracies. While t
We have made significant progress on the three components of the project. The work performed resulted in 11 working papers, 3 already published and 1 at the revised and resubmitted stage in an international peer-reviewed journal. We also made progress on some other subprojects but they have not yet been turned into working papers. Members of the team have been invited to present those papers at conferences, workshops, and seminars. Last but not least, we organized a two-day conference in Brussels in June 2017.
Component 1
Voter rationality has been at the center of a heated debate for decades. Its detractors attack this modelling approach on the grounds that some central predictions of the rational voter model are contradicted by the facts. However, recent theoretical advances suggest that the empirically unsound predictions of the rational-voter model could be an artifact of a simplifying assumption: there is no aggregate uncertainty about the distribution of preferences in the electorate. In Bouton, Castanheira, and Llorente-Saguer (2017), we test whether aggregate uncertainty alone may produce a change in voting behavior that is qualitatively important. We adopt a theory-based experimental approach.
Given the lack of consensus around the rational-voter model, various alternative models of voting have been proposed. Among those, the so-called group-based voting models appear quite promising. They predict high turnout level, and produces comparative statics that are empirically sound. Moreover, direct tests of those models are quite conclusive. In Bouton and Ogden (2018), we developed a group-based model of voting in multicandidate elections. We study two of the most-widely used electoral rules around the world: the plurality rule and the majority runoff rule.
To foster our understanding of the strategic behavior of voters, we considered different electoral rules both theoretically and in the laboratory. In Bouton, Gallego, Llorente-Saguer, and Morton (2019), we studied the properties of the majority runoff system and compare them to the ones of plurality rule, in the setup of a divided majority. In work that has not yet been turned into working papers, we studied various other electoral rules, including instant-runoff and cumulative voting.
Component 2
The role of campaign contributions in elections is a central issue in democracies. While the focus has typically been on an influence motive of large donors, small contributions represent a very substantial fraction of campaign funding. The literature fails to provide a compelling analysis of the motivations of small donors, arguing almost by default that small contributions are a consumption good to these donors. However, several empirical patterns of small contributions are hard to reconcile with a simple consumption motive.
In Bouton, Castanheira, and Drazen (2018), we propose a theory of small campaign contributions driven by an electoral motive, that is, by the possible influence of contributions on the outcome of an election. Electoral considerations produce strategic interactions among contributors, even when each donor takes as given the actions of other donors. These interactions induce patterns of individual contributions that are in line with empirical findings in the literature. We then study the impact of different forms of campaign finance laws.
In work that has not yet been turned into working paper, we applied this new theory of contributions to multicandidate elections. In that case, the issue of coordination among donors becomes salient.
Component 3
As a first step, we focused on building a better model of candidates’ incentives and behavior. We were particularly interested in the properties of the so-called citizen-candidate model and how to include important features of the environment (i.e. aggregate uncertainty about the preferences of voters and a multidimensional policy space). This resulted in three working papers (Solow 2016a, 2016b, 2016c).
The
The work performed over the course of the action produced significant progress beyond the state of the art. The highlights are the following:
1. We proposed direct empirical evidence of the effect of aggregate uncertainty in multicandidate elections.
2. We developed a group-based model of voting in multicandidate elections.
3. We developed a voting model that endogenously generates electoral groups consistent with group-based voting by focusing upon “like-minded” voters.
4. We studied the strategic behavior of voters under various electoral systems, as well as the properties of those systems when voters are strategic.
5. We proposed a new theory of contributions as shaped by the electoral motive.
6. We explored the properties of the citizen-candidate model and developed it along several new dimensions.
7. We explored different ways voters determine which candidate they prefer, and how these affect the behavior of candidates.
8. We exploited the group-based voting model developed in Component 1 to analyze the behavior of candidates in multicandidate elections with strategic voters .