We just studied the parties’ temptation to deviate towards stealing all issues from each other. The second deviation to consider is whether party A prefers to stop investing in its platform, and let party B dominate on all issues. This also leads to issue stealing, although for the opposite reason: it is party A’s decision to abandon issue a to party B that allows the latter to dominate.
When party A reduces quality levels to 0 in all issues, it wins with probability 0 at cost 0. Its payoff is thus nil. The temptation to deviate from qA,P SE to 0 is thus identical to checking the parties’ participation constraint in the PSE. A second necessary condition for the pure strategy equilibrium to exist is that the payoff in (9) is positive, or:
Proposition 7 (Participation Constraint – PC) A necessary condition for the pure strategy equilibrium to exist is that comparative advantages θ be large and priming
effectiveness β be small: ΠP qP SE, t ≥ 0, iff θ ≥ θ∗(β, θc) ≡ 5 − 3β 3 − 5β + 4(1−β)2θc (1+β)(3−5β) and β < 3/5. (13)
Proposition 7 sheds a new light on the effects of priming on political competition. It shows that the overall effect of priming can work against the parties’ objective of securing a safer position. Within the pure strategy equilibrium, higher priming effectiveness forces both parties to invest more in quality. This is the homogeniza- tion effect identified above. Party rents thus decrease and, by Proposition 7, the incentive to deviate from the PSE by pulling out of the race increases. Like in the previous case, since an equilibrium must exist, it must be in non-degenerate mixed strategies.26
Importantly, the incentive to pull out does not imply that competition gets soft in that equilibrium: if a party pulls out, the other party can dominate in all issues with very low policy qualities. In turn, this implies that the former party now also has an incentive to increase policy quality above its competitor’s. This induces the other party to also increase quality, and so on up until the quality levels become so costly to reach that their participation constraint becomes binding.
Figure 7 illustrates the combined effects of the two conditions (11) and (13) when θc = 0. The two conditions are represented by the curves NISC and PC respectively. The PSE exists when comparative advantages are sufficiently large and priming effects are not too strong. Graphically, this is represented by the white area above both the NISC and PC curves, where θ is large and β takes intermediate
26From the discrete choice space of the model described above, it is easy to identify how the
mixed strategy equilibrium would be determined: imagine that the costs of supplying the PSE qualities are so high that it becomes dominated by 0. Then, there must exist two other quality effort levels strictly between 0 and PSE that satisfy the same conditions as in that simplified version of the model, and that produce the same mixture, with issue stealing.
Figure 7: The NISC (No Issue Stealing Condition) and PC (participation constraint) when θc= 0
values. For such parameter values, parties are sufficiently differentiated (reputation advantages are large) to render issue stealing too costly, and parties do not need to invest lots of resources to ensure a 50% probability of winning, which ensures that their participation constraint is met. Competition is thus relatively soft in this area, leaving parties with strictly positive rents.
In the bottom left area of the graph, that is when party differences fade away (i.e. θ → 1) and priming effectiveness is sufficiently small, the temptation to engage in issue stealing becomes too strong for the pure strategy equilibrium to survive. As seen above, both parties then adopt a non-degenerate mixed strategy, which produces issue stealing with strictly positive probability. In the bottom-right area, the participation constraint is violated: the combination of low party differentiation and high priming effectiveness would force the two parties to engage in very costly investments to meet the PSE quality levels. They then also adopt a non-degenerate mixed strategy, again with the possibility of observing issue stealing.
Finally, the participation constraint shifts up when parties become abler at han- dling the unbiased issue (i.e. if θcincreases). In other words, issue stealing should be more frequent when issues in which no party has a reputational advantage become
more relevant in the political debate.
Conclusions
We proposed a model of endogenous issue ownership in which parties can compensate for a prior reputation disadvantage by investing in policy innovation. This contrasts with the standard approach on issue ownership: while lesser competence makes it costly to dominate on an issue, costs need not be prohibitive. Our contribution is precisely to identify under which circumstances a party chooses to maintain its reputational advantage and focus on its historically strong issues, or instead try to steal the opponent’s issues.
We show that two parameters are central to distinguish these two cases: the magnitude of the initial reputation advantage and the effectiveness of the commu- nication campaign. In contrast to common intuition, we find that elections become more competitive when the effectiveness of the communication campaign is higher, that is when priming has stronger influence on the voters. This is also when the incentive to engage in issue stealing increases. In other words, the parties’ initial reputation (dis)advantage over each issue matters less when political advertisement becomes very effective. This result helps explain why issue ownership may have become less stable than traditionally perceived. Two additional and empirically testable results emerge from our analysis. First, the stronger is party reputation on key issues, the less competitive the election becomes, and the less likely is issue stealing. Second, stiff competition and issue stealing become more likely when par- ties face lower investment costs to providing innovative policies on “neutral” issues (issue c in the model).
campaign also impact on voter welfare. Voter welfare is unambiguously increasing in policy quality. Yet, we found that more effective political advertisement affects policy quality differently across issues. For instance, in a pure strategy equilibrium, higher priming effectiveness leads to higher quality in the issues that are advertised, and lower quality in the muted issue. Welfare can thus be said to increase in priming effectiveness if quality is already close to zero for the muted issue. For the other cases, one must be cautious: the weighting rule that voters use when casting their ballot is manipulable and can thus not be treated as a welfare function. Similarly, in a mixed strategy equilibrium, realized qualities can be high or low, and which issues will be brought up during the campaign remains uncertain ex ante. Future research is thus needed to fully assess the welfare implications of such equilibrium behavior.
Note also that our model only focuses on valence issues: in our setup, voters only compare the relative quality of the two parties’ proposals and vote for the platform with the highest weighted-average quality. This neglects ideology and issue divisiveness. We however want to argue that our approach (1) is robust to the introduction of some ideology in the voters’ decision and (2) usefully complements the analysis of divisive issues by, e.g. Colomer and Llavador (2011), Glazer and Lohmann (1989), or Morelli and Van Weelden (2011, 2013).
We indeed could incorporate an ideological position attached to each voter and party. Introducing ideology would mean that the voters’ tipping points in favor of one or another party would differ across voters, depending on the ideological distance between the party and their own bliss point. Thus, a party “dominating” on an issue would no longer swing all voters at once, but rather a fraction of the electorate that would be increasing smoothly in the quality advantage. In this way,
a party’s winning probability would increase steadily in its relative quality, and decrease in its ideological distance from the “average voter”. On the one hand, this would make the analysis of mixed strategy equilibria simpler (since there would no longer be payoff discontinuities). In the spirit of the analyses by Krasa and Polborn (2010, 2014), it would also make it possible to analyze the question of why and when parties polarize, but this is beyond the scope of this paper. On the other hand, it would imply carrying over an additional expected ideological distance parameter (and its distribution) in all equations and conditions. Thus, while it would make the model a lot more realistic, this would be at the expense of substantial added complexity. In order to maintain the analysis simple, we have decided not to pursue this research line at this stage.
Regarding issue divisiveness, note that the above-referenced analyses do not study the feedback effects between the advertisement campaign and equilibrium platform quality. Clearly, a model that combines the intuitions of both approaches would be richer, but again at the expense of a significant increase in computational complexity. We also want to argue that divisive and valence issues coexist in electoral campaigns and target different audiences. Divisive issues are likely to affect more intensely the vote of partisan voters rather than independent voters. In contrast, swing voters and centrist voters are more sensitive to arguments about which policies will bring them a higher return. For instance: how to create more jobs? Which is the policy most likely to increase my disposable income? Which is the policy that will provide me with best protection against criminal activities? These swing voters are the ones we have in mind in our model, and we believe that our model is well suited to explain the sometimes significant electoral swings that are observed across elections. As our examples illustrate, many of these swings happened after a party
acquired a “valence advantage” in some important issue. Interestingly, our model implicitly predicts that each voter will tend to remain more attached to a party if issue ownership remains stable across elections. The study of the relationship between partisanship and issue stealing is however left for future research.
Another potential avenue for future research is to go beyond the symmetric cases studied in this paper. Allowing for asymmetric comparative advantages for parties or a multiplication of issues would produce richer results. However, they would still stem from the same trade-offs as those identified in the symmetric case. Similarly, relaxing the assumption of a uniform distribution of the voters’ initial issue salience might make equilibrium results fit additional stylized facts. For example, one could think that exogenous shocks increase or reduce the salience weight of some issues. Then, the campaign would again become asymmetric, depending on which party has a reputation advantage on the “shocked” issue.
Finally, the selection of issues during electoral campaigns also requires further research concerning the threat of entry by single-issue parties. This would provide a useful starting point to better analyze proportional elections.
Appendix
Proof of Proposition 1: Consider the maximization problem for party A. In the second stage of the game, party A’s FOCs are given by ∂Π∂tAA
k
= ∂π∂tAA k
≥ 0 for k ∈ {a, b, c} . Maximizing the payoff is therefore equivalent to maximizing the probability of winning. Suppose that ∆a > ∆c> ∆c. In that case, the set of voters who cast their ballot for A
is given by (6). To maximize its probability of winning, A must therefore increase sia(ta)
and reduce sib(tb), which is achieved by focusing all its advertisement campaign on issue
a, i.e. set tAa = 1/2. Conversely, party B should focus all its advertisement campaign on issue b, i.e. set tBb = 1/2.
If instead ∆b > ∆a> ∆c, then party A’s probability of winning is decreasing in sia(ta)
and increasing in sib(tb). Hence, A must focus all its advertisement campaign on issue
b, i.e. set: tAb = 1/2, whereas party B should focus its campaign on issue a and set tBa = 1/2. Applying the same reasoning to all possible rankings of ∆a, ∆b, and ∆c yields
the proposition.
Proof of Proposition 2. Remember that the two parties’ payoffs are respectively:
ΠA qA, qB, tA, tB = πA qA, qB, tA, tB −X k qkA2 θAk , and: ΠB qA, qB, tA, tB = 1 − πA qA, qB, tA, tB −X k qkB θBk 2 .
Moreover, θAa = θBb ≡ θ > 1 ≡ θAb = θBa and θAc = θBc ≡ θc. It follows that the parties’
dΠA dqA c = ∂π A ∂∆c ·∂∆c ∂qA c − 2q A c θc = ∂π A ∂∆c − 2q A c θc = 0, dΠB dqB c = ∂π B ∂∆c ·∂∆c ∂qB c − 2q B c θBa = − ∂πA ∂∆c (−1) − 2q B c θc = 0. Thus, in equilibrium, qAc∗ = qcB∗ = θc 2 ∂πA ∂∆c, which implies ∆c≡ q A c − qcB= 0.
Similarly, the parties’ FOCs with respect to qa are:
dΠA dqA a = ∂π A ∂∆a ·∂∆a ∂qA a − 2q A a θ = ∂πA ∂∆a − 2q A a θ = 0, dΠB dqB a = ∂π B ∂∆a ·∂∆a ∂qB a − 2qaB= −∂π A ∂∆a (−1) − 2qaB = 0. Thus, in equilibrium, qaA∗ = θ2∂π∂∆A a and q B∗ a = 12 ∂πA ∂∆a, which implies q A∗ a /qB ∗ a = θ. Recall that θ > 1. Hence, ∆a ≡ qA ∗ a − qB ∗ a = (θ − 1) qB ∗
a > 0. Applying similar calculations to
qb obtains qB ∗ b = 12 ∂πA ∂∆b and q B∗ b = θ2 ∂πA ∂∆b. Therefore, q B∗ b /qA ∗ b = θ and ∆b ≡ qA ∗ b − qB ∗ b = (1 − θ) qaB∗ < 0. Lemma A1. Let: α ≡ ∆c− ∆b ∆a− ∆c (> 0) and γ ≡ − ∆c ∆a− ∆c (14)
The parties’ winning probabilities can then be written as: πA qA, qB, qC; tA, tB= 1 if γ + αβtb≤ βta− α (1 − β) 1 −[α(1−β)+γ+β(αtb−ta)]2 α(1+α)(1−β)2 if βta− α (1 − β) ≤ γ + αβtb ≤ βta [(1−β)−γ+β(αta−tb)]2 (1+α)(1−β)2 if βta≤ γ + αβtb ≤ βta+ 1 − β 0 if γ + αβtb≥ βta+ 1 − β (15) πB qA, qB, qC; tA, tB = 1 − πA qA, qB, qC; tA, tB
Proof. Using (2) and Proposition 2, the pivotal voter will vote for A at stage 3 if her weighting of issue a, denoted sia, is higher than the value defined by the separating line:
sa(ta) = sb(tb) α + γ. (16)
In this proof, we focus on the case in which γ + αβtb ≤ βta, which is depicted in Figure
8. We also impose that γ + αβtb is sufficiently large, such that πB(·) is strictly positive.
Graphically, these conditions imply that the separating line cuts the simplex “from below”. B’s winning probability is then the (strictly positive) mass of points with sa(ta) ≤ γ +
αsb(tb). Knowing that, within the simplex Ss(t, β), the density is 2/ (1 − β)2, B’s winning
probability is defined by:
πB qA, qB, qC; tA, tB = Z s1a βta K−sa Z sa−γ α 2 (1−β)2dsbdsa, (17)
where: K ≡ β (ta+ tb) + (1 − β) is origin of the downward sloping line sa = K − sb in
Figure 8 and s1a≡ αK+γ1+α is the value of sa at the point of intersection between that line
sa sb K K γ βtb βtb+1−β βta βta+1−β γ+αsb=sa s1 a K−sb πb
Figure 8: The winning probability of B is given by the black area.
line. This integral represents the surface of the triangle πB in Figure 8, multiplied by the density of the population within the simplex.
Substituting for K and s1
a in (17) and executing the integral yields:
πB(·) = [α(1−β)+γ+β(αtb−ta)]2
α(1+α)(1−β)2 . (18)
The second value of πA(·) in (15) is simply 1 − πB(·). The first, third, and fourth cases in (15) are the values of πA(·) when the separating line respectively (i) passes entirely to the right of the simplex, (ii) cuts the simplex “from the left” and (iii) passes entirely above the simplex.
Proof of Lemma 1: To prove the lemma, we use the winning probabilities that result from Lemma A1 (see above in this appendix) when tk = 1/3, ∀k ∈ {a, b, c}, solve for the
equilibrium quality levels that would result, differentiate them with respect to β. Focusing on the same case as in Lemma A1, we have:
πB qA, qB, qC;13,13 = [α(1−β)+γ+β(α−1)/3]
2
α(1+α)(1−β)2 (19)
The first order conditions defining the optimal levels of quality are therefore: ∂πP
∂α ∂α ∂qP k
∂πP ∂γ ∂γ ∂qP k = 2q P k θk , where ∂πA ∂x = − ∂πB
∂x for x = α, γ. Differentiating (19) yields:
∂πB ∂α = (1−23β)(1−2γ)−(1+2α) β/3−γ α 2 (1+α)2(1−β)2 , and ∂πB ∂γ = α+γ−β(1+2α)3 α(1+α)(1−β)2.
Differentiating α and γ and substituting, we find that in equilibrium, qbA must be equal to qaB, and hence that α = 1. From Proposition 2, we also have that γ = 0. After some manipulations, this yields:
qaA/θ = qBa = r 4−(1+β)2 24(1−β)2(θ−1) = q B b /θ = qbA. (20) This implies: ∂qA b ∂β = (1 − β) r 6 (θ − 1) 4 − (1 + β)2 !−1 > 0. Next, we have: qAc = √2θc 6√θ−1 β2−4β+3 (1−β) √ 3−2β−β2.
Differentiating and simplifying:
∂qcA ∂β = 8βθc √ 6√θ−1(3−2β−β2)3/2 > 0
Proof of Proposition 3: To prove the proposition, we use the winning probabilities that result from Lemma A1 (see above in this appendix) when ta= tb = 1/2, and tc= 0.
Using the same reference case as in the proofs of Lemmas 1 and A1, we have:
πB qA, qB;12,12 = [α(1−β)+γ+β(α−1)/2]2
α(1+α)(1−β)2 . (21)
Note that the only difference between (21) and (19) in the proof of Lemma 1 is that the last term in the numerator is divided by 2 instead of 3. Derivations are thus similar
and imply again that α = 1 and γ = 0. In other words, any pure strategy equilibrium must be symmetric and such that: qaA/θ = qBa = qbB/θ = qbA.
Using the equilibrium values of α and γ to simplify ∂π∂αA and ∂π∂γA yields:
∂πA ∂α = − 1 + β 4 (1 − β) (22) and ∂πA ∂γ = − 1 1 − β. (23)
The proposition follows from substituting these values into the FOCs and finding that the solution is unique.
Now, we prove two Lemmas that show that we only need to consider one specific deviation towards Case A or Case B. The first Lemma focuses on Case A:
Lemma 2 Conditional on party A uniformly dominating party B (mink ∆k ≥ 0), party
A maximizes its objective function by setting qaA= qaB+ εa, qAb = qBb and qcA = qBc + εc,
with εa, εc≥ 0 and εa εc= 0.
Proof. For any qAa, qbA, qcA such that mink ∆k ≥ 0, the winning probability of party A
is 1. Therefore, party A can only increase its payoff by reducing quality provision, subject to mink ∆k≥ 0 and at least one ∆k> 0.
The next lemma establishes that we only need to consider one potential deviation towards Case B:
Lemma 3 Conditional on party B uniformly dominating party A (maxk ∆k ≤ 0), party
A maximizes its objective function by setting qAa = qAb = qAc = 0.
Proof. Party A’s winning probability is always 0 in this case B. Cost minimization yields the result.
Proof of Proposition 5: The first stage of our model features continuous payoffs almost everywhere: payoffs are continuous for any quality vectors qA 6= qB. Glicksberg
(1952) proves equilibrium existence when payoffs are continuous. Hence, the question of equilibrium existence only arises because of discontinuities at the points in which qA= qB. To see this, fix ˆqB = qbaB,qbbB,qbcB . For qA= ˆqB, we have ΠP = 1
2, for P ∈ {A, B} . Yet,
for any ε > 0 and any issue k, if qkA = qbkB − ε whereas the other qualities qA
j remain
unchanged, we are in Case B and we have ΠA= 0 . Conversely, if qAk =qb
B
k + ε whereas
the other qualities qAj remain unchanged, we are in Case A, and we have ΠA= 1 . This situation is identical to that of an all pay auction, in which auctioneers sink a bidding cost (here: CP qP) before the auction, and the bidder with the highest bid wins the
auction. Baye, Kovenock, and de Vries (1996) prove that an equilibrium must exist in such games.
Proof of Proposition 7: The participation constraint is violated if ΠA(PSE) < 0. From (9) , this imposes that:
1 2 − 1 + β 1 − β θ + 1 8 (θ − 1)− 1 − β 1 + β θc 2 (θ − 1) < 0.
After some manipulations, this yields:
θ (3 − 5β) < 5 − 3β + 4(1−β)(1+β)2θc. (24)
This inequality always holds for β ≥ 35. Conversely, for β < 35, simplifying (24) yields Proposition 7.
Differentiating the condition with respect to β shows that θ∗(β, θc) , which is the lowest
level of θ compatible with the PSE, is increasing in β if either β > 1/3 or θc< (1+β)
2
(1−β)(1−3β).
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