Elections and strategic positioning games

Byline: Frank H. Page Jr (1), Myrna H. Wooders (2) Keywords: Farsighted stability; political common agency games Abstract: We formalize the interplay between expected voting behavior and strategic positioning behavior of candidates as a common agency problem in which the candidates (i.e., the principals) compete for voters (i.e., agents) via the issues they choose and the positions they take. A political situation is defined as a feasible combination of candidate positions and expected political payoffs to the candidates. Taking this approach, we are led naturally to a particular formalization of the candidates' positioning game, called a political situation game. Within the context of this game, we define the notion of farsighted stability (introduced in an abstract setting by Chwe 1994) and apply Chwe's result to obtain existence of farsightedly stable outcomes. We compute the farsightedly stable sets for several examples of political situations games, with outcomes that conform to real-world observations. Author Affiliation: (1) Department of Finance, University of Alabama, AL 35487, Tuscaloosa, USA (2) Department of Economics, University of Warwick, CV4 7AL, Coventry, UK Article note: Received: 18 May 2001, Accepted: 22 January 2002, JEL Classification: Myrna H. Wooders: http://www.warwick.ac.uk/fac/soc/Economics/wooders/ An earlier version of this paper was completed while the first author was visiting the Department of Economics, University of Exeter. The first author gratefully acknowledges Exeter's support and hospitality. Similarly, the second author gratefully acknowledges the support and hospitality of the Centre for Operations Research and Econometrics (CORE) of the University of Louvain-la-Neuve, Belgium and of the University of Cergy-Pontoise, France. Both authors are indebted to Amrita Dhillon, John Duggan and Gilat Levy for helpful comments about references. Both authors thank an anonymous referee for helpful comments.