Moving with the Mandate: The Role of Margins of Victory in Political Competition.

We analyze a model of dynamic political competition under uncertainty in which parties use the previous election to update their beliefs about the electorate. We find that if the candidates in the previous election are not identical, office-motivated parties rely on the margin of victory to update their estimate of the location of the median voter, to which they converge. In equilibrium, parties react more strongly to the vote share when the electorate is polarized, when they are less confident in their prior beliefs, and when there is less uncertainty about the location of the median voter. Policy-motivated parties also rely on the margin of victory choosing divergent candidates. Divergence is increasing in the closeness of the previous election and confidence in prior information, and decreasing in the polarization of the electorate. [ABSTRACT FROM AUTHOR]