Elections and Reforms in Democracy∗

***PRELIMINARY***

Carlo Prato† Stephane Wolton‡

March 4, 2013

Abstract

We analyze a model of electoral competition with costly political communication. A rep-

resentative voter elects one between two candidates, who compete by choosing (1) whether

or not to commit to a reform (whose implementation is costly for them) and (2) how in-

tensely to campaign on the issue they choose. Candidates have private information regarding

their competence and the reform is beneficial to the voter only if implemented by a com-

petent politician. Elections thus serve the dual purpose of screening competent candidates

and providing incentives to carry out welfare-improving change. The key innovation is that

a candidate successfully communicates her platform to the voter only if both exert effort

as in Dewatripont and Tirole (2005). After characterizing the conditions for a separating

equilibrium to arise, we show that reforms are implemented with positive probability and, if

implemented, benefit the voter only if the voter’s gain from policy changes is in an intermedi-

ate range. When this gain is too small, the voter cannot provide enough electoral incentives.

When the gain is too large, he faces the risk of policy failure. Moreover, beneficial reforms

are more likely to occur when the election is close.

JEL Classification: D72, D78, D83.

Keywords: political campaign, electoral competition, team problem.

∗We would like to thank Peter Buisseret, Navin Kartik, Pablo Montagnes, Larry Samuelson, Francesco Squitani,

and seminar participants at Princeton and University of Chicago for helpful comments.†Georgetown University, Edmund A. Walsh School of Foreign Service, and Princeton University, Department of

Politics. 130 Corwin Hall, Princeton, NJ 08544. E-mail: cp747@georgetown.edu.‡University of Chicago, Department of Economics. 1126 E. 59th St, Chicago, IL 60637. E-mail:

swolton@uchicago.edu.

1

“This election is not about ideology, it’s about competence.”

Michael Dukakis at the Democratic Convention in 1988

1 Introduction

Electoral campaigns are important. In recent years, around 40% of the American electorate has

decided which candidate to support during the campaign (McAllister, 2002). In a campaign,

candidates spend millions of dollars, 1 hold multiple rallies per day and participate in several

debates2. Their goal is to “..inform, persuade, and mobilize” voters (Norris, 2002 p.128, emphasis

in the text; see also Salmore and Salmore, 1989; Nimmo, 1996; Asp and Esaiasson, 1996; Holbrook,

2011, Hollihan, 2011), and empirical evidence suggests that campaigns indeed increase voters’

knowledge of candidates and their platforms (Brians and Wattember, 1996; Joslyn and Ceccoli,

1996; Freedman et al., 2004).

Although campaigns are often dominated by a single or a few issues (Elliott, 1989),3 “vot-

ers care less about candidates’ issue positions than they do about which candidates can deliver

the most on these issues. (...) In short, they care about competence” (Popkin, 1991 p.61, em-

phasis added), as argued as well by former Governor and presidential candidate Michael Dukakis

in 1988 in the quote above.4 Polls repeatedly ask voters which candidates they trust more on

different issues. Trustworthiness, leadership, and competence are the main characteristics voters

look for (Gidengil et al., 2002, Blumenthal, 2011), and campaigns give a chance to candidates to

show their capabilities. Not surprisingly, voters infer candidates’ competence from their campaign

performance (Popkin, 1991).

However, candidates struggle to reach voters in a noisy environment, and their communication

effort matters only if voters follow the campaign.5 Political ads are effective to the extent that

voters pay attention to them (Franz, 2011). Campaigns are a “complex and highly interactive

dialogue shared by voters, candidates, and the press” (Murphy, 2011 p.138 emphasis added). It

1According to the Center for Responsive Politics, candidates spent $1.4bn during the 2008 Presidential campaign2President Obama and Governor Romney debated three times during the 2012 Presidential election3For example, more than 70% of respondents cited the economy as one of the most pressing issues (51% as the

most pressing issue) in the 2012 election (source: CBS News - NYTimes Poll, October, 30th 2012).4Democratic media consultant Tony Schwartz also explained: “I don’t think inflation is an issue. Who’s for it?...

The real issue is which of the two candidates would best be able to deal with [it]” (cited in Salmore and Salmore,1989).

5Not surprisingly, the level of attentiveness varies among voters (McAllister, 2002).

2

seems then natural to think of campaigns as a team production problem between candidates and

voters. Candidates need to reach out to voters with a clear message, voters need to pay attention

to what politicians have to say.

In this paper, we study how the introduction of political communication as a team problem

affects politicians’ incentives to promise welfare-improving reforms. We analyze moral hazard and

adverse selection in a model of electoral competition with three players: two candidates and a

representative voter. In what follows, we use the pronoun ‘she’ for a candidate and ‘he’ for the

voter. Candidates, who privately know whether they are competent or non competent, compete

for an elected office (which they value). During the campaign, they choose a policy platform:

campaigning on their party’s traditional issues (or owned issues, see Petrocik, 1996, Petrocik et

al., 2003) or proposing a reform (tackling a new issue). Once in office, it is less costly for politicians

to implement her party’s traditional policies than a reform. Furthermore, the cost of implementing

a reform is lower for a competent type.

For the voter, parties are informative label when it comes to their traditional policies. The

voter has a somewhat clear idea that voting for party would result in a certain set of policies (i.e.,

Republicans lowering taxes, Democrats expanding entitlements) which typically fluctuate in their

relative importance for the voters. On new issues (the reform policy), voters cannot rely on party

cues and have to be convinced that the candidate has the leadership and competence to bring

forward beneficial change. We thus assume that, with respect to a party’s owned issues, the voter

gains (loses) from a reform when it is implemented by a competent (non competent) politician.

Elections thus serve two purposes: screening competent politician and providing incentives to

commit to welfare improving change.

In this paper, we propose a novel view of political communication. We suppose that political

communication is a team effort between a candidate and a voter a la Dewatripont and Tirole

(2005). In order for the voter to learn the candidate’s policy stance, they both need to exert

costly communication effort (clarity and advertising for a candidate, attention for the voter).

The probability that the voter observes a candidate’s platform is increasing in the voter’s and

candidate’s communication efforts.

We study under which circumstances there can be a separating equilibrium which maximizes

the voter’s (expected) welfare. In such an equilibrium, competent candidates propose a reform

and non competent candidates campaign on their party’s owned issue. Such equilibrium features

3

positive communication effort from competent candidates and the voter. Since implementing a

reform is costly, and more costly for a non competent politician, proposing a reform during the

electoral campaign acts as a signal of a candidate’s competence. We show that a separating

equilibrium requires that (1) a competent politician’s cost of implementing a reform is low enough

and (2) the difference between a competent and a non competent candidate’s costs is high enough.

Politicians trade-off lower payoff once in office and the cost of communicating with the voter

with the electoral gain from promising a reform. When a competent candidate’s cost of implement-

ing a reform is high, electoral incentives are dominated by the reduced payoff from holding office

and undertaking a reform. More interestingly, and contrary to what happens in standard adverse

selection models, when the difference in costs across types is low, a separating equilibrium does

not exist. A non competent politician has an incentive to propose a reform and free ride on the

voter’s (and the competent type’s) communication effort. A separating equilibrium would exist if a

competent and a non competent candidates were facing the same set of incentive constraints, but,

in this setting, the other players’ communication effort essentially acts as an additional incentive

to mimic a competent type.

We then study how the voter’s gain from a reform affects the existence of a separating equilib-

rium. The voter is more prone to listen to candidates (exerts more effort) when his benefit from

reform is higher. However, an increase in the voter’s benefit from a reform can also makes it more

attractive for a non competent politician to deviate and propose a reform. When that happens,

the voter is no longer able to use electoral incentives to protect himself against policy failures. A

higher gain for the voter creates a “communication externality” that may lower his equilibrium

payoff. On the other hand, when the voter’s benefit from a reform is too low, politicians do not

have sufficient incentives to advocate for welfare-improving change. The voter pays little attention

to the campaign and a competent politician’s return on communication effort is too low. Good

times (when the gain from reform is arguably low) lead to a status quo bias, while periods of deep

crisis (high gain from reform) lead to the risk of botched reforms. The voter is certain than some

reforms will be implemented and he will benefit from them only when his gain from policy change

is intermediate.

Our paper suggests that, in time of crisis, campaigns fail to act as a screening tool for political

competence. In this situation, either no candidate considers proposing reforms or too many candi-

dates (competent and non competent politicians) promise change. Welfare-improving reforms then

4

become increasingly hard to implement. Our model can provide some insight on the delayed re-

forms in Greece, a country which needs dramatic structural change, and where voters do not trust

their representatives.6 More worryingly, our model suggests that reforms may occur in Greece only

when the country becomes more stable. Given that the market expectations are that the Greek

crisis will be over when reforms are implemented, Greece may be stuck in a vicious circle.

A similar logic is also behind another seemingly counterintuitive result: a decrease in a com-

petent candidate’s cost of implementing a reform may lower the voter’s equilibrium payoff (even

keeping the non competent politician’s cost constant). A lower cost implies a higher return on

communication effort for a competent politician, which in turn increases the voter’s effort and, as

a consequence, amplifies the “communication externality” described above. It is more attractive

for a non competent candidate to deviate and “pool” with a competent type by campaigning on a

reformist platform.

This model thus provides an alternative rationale for the existence of institutional arrangements

making the implementation of reform difficult (vetoes, supermajority requirements, filibuster rules,

etc.). By increasing institutional inertia, which we relate to the cost of introducing new policies,

voters may ensure themselves a higher payoff even if the cost is bore only by competent politicians.

More generally, our paper describes an important trade-off for the design of political institutions:

a low cost of implementing reforms encourages competent (and only competent) politicians to

propose policy changes as long as the voter’s benefit from reforms is not too large, but it also

increases the risk of policy failure when change is much-needed by the voter.

Lastly, we consider how electoral imbalance affects the existence of a separating equilibrium.

We define electoral imbalance as the relative importance of traditional partisan policies. We find

that moderate amount of electoral imbalance does not have a strong effect on the voter’s payoff:

he can still benefit from successful reforms (a separating equilibrium exists). Interestingly, the

voter listens more to the candidate from the (ex ante) disadvantaged party, so electoral campaigns

can counter-balances electoral imbalance (see also Prato and Wolton, 2013). However, when one

candidate’s advantage is large, the likelihood that the voter obtains welfare-improving changes is

reduced, as the voter faces the risk of policy failures. Our model thus predicts that the voter gets

the most of the electoral system when races are close, as empirically documented in Bowen and

Mo (2012).

6According to a poll commissioned by the newpaper I Kathimerini in September 2012 54 percent of the Greekelectorate does not trust any of the nine parties in the parliament.

5

The rest of the paper is organized as such. In the next section (Section 2), we review the

related literature. In section 3, we describe the model. In Section 4, we solve the model when

parties (and thus candidates) are (ex-ante) identical. Section 5 considers the case when one party

has some electoral advantage. Section 6 concludes. All the proofs can be found in Appendix A.

2 Related literature

To the best of our knowledge, this paper is the first to analyze electoral campaigns as a moral

hazard in team problem. Several papers study electoral competition with costly communication

(for example, Grossman and Helpman, 1996; Prat, 2002; Coate, 2004a and 2004b; Ashworth, 2006;

Wittman, 2007; Prato and Wolton, 2012). However, these papers assume that only candidates have

to pay a campaigning cost. Furthermore, most of them focus on the relationship between special

interest groups and politician, where the former subsidize the campaigning cost of the latter in

exchange for policy favors.7 By contrast, we focus only the relationship between a representative

voter and politicians. Aragones et al. (2012) also studies the impact of campaigns on voter’s

evaluation of candidates, but the focus is on how candidates can raise the salience of an issue for

the voter by communicating on it. In this paper, instead, we assume that a candidate reveals her

platform to the voter through campaign communication.

This paper is also related to the literature on principal agent problems in politics. A repre-

sentative voter acts as a principal and try to incentivize, by means of a simple retention rule,

politicians (their agents) to undertake actions that increase his welfare (Banks and Sundaram,

1998; Canes-Wrone et al., 2001; Besley, 2006; Ashworth and Bueno de Mesquita, 2006 and 2008).

In most of the literature, the voter faces only one agent: an incumbent choosing policies in order to

get reelected. To focus on the role of electoral campaigns, we suppose that the voter faces two “ap-

plicants” to become his agent: candidates choose a campaign manifesto and how to communicate

it to the voter.

This paper also provides a novel explanation for the difficulty of implementing welfare-improving

reforms that has puzzled political scientists and economists (Sturzenegger and Tommasi, 1998;

Drazen, 2000). Failures to adopt or delay in adopting beneficial reforms have been attributed

to decision-makers’ lack of technical knowledge or a country’s lack of human or physical capital

7An exception is Prato and Wolton (2012), where we analyze a pure moral hazard version of the model studiedin this paper.

6

(Williamson, 1994). Uncertainty on the good timing of reforms (Laban and Sturznegger, 1994a

and b; Mondino et al., 1996) or who benefits from the reform (Fernandez and Rodrick, 1991;

Cuckierman and Tommasi, 1998) has been advanced as other potential reasons. Reforms may be

delayed because vested interests block the reform (Olson, 1982; Bernhabib and Rustichini, 1996;

Velasco, 1999) or fight on who will bear the cost of reform (Alesina and Drazen, 1991; Drazen and

Grilli, 1993; Hsieh, 1997).8

This paper assumes that uncertainty regarding politicians’ competence can explain the delay in

the implementation of welfare-improving reforms (see Krueger, 1992; Naım, 1993; Bresser Pereira,

1994 for evidences).9 This lack of trust can be alleviated by (but not fully solved) by electoral

campaigns which are an imprecise instrument for candidates to reveal their capabilities. Further-

more, unlike the previous literature, this paper shows that crises are not necessarily associated with

reform. This is in line with the recent European experience where the crisis has only generated

modest reforms and papers which show weak empirical support for the crisis hypothesis, i.e. crises

foster reforms (see Drazen and Easterly, 2001).

Finally, this paper contributes to the literature on communication by modeling a campaign

between a candidate and a representative voter as a moral hazard in team, following Dewatripont

and Tirole (2005). In this setting, which can be interpreted as a bridge between models of soft

information transmission (Crawford and Sobel, 1982) and hard information transmission (Gross-

man, 1981; Milgrom, 1981; Bull and Watson, 2004 and 2007), candidates (the senders) provide

hard information regarding their policy stance when communication is successful and endogenously

affect the probability that communication is successful.

We extend Dewatripont and Tirole (2005)’s model in three directions. First, we solve a multi-

sender version10 where senders compete for a single-prize awarded by the receiver (thereby com-

plementing Persson, 2012, where senders compete for the receiver’s attention). Second, voters face

both adverse selection and moral hazard concerns: after successful communication, the voter only

knows what the sender will do if he selects her, not whether he will benefit from her action. Third,

to the best of our knowledge this paper is the first to provide sufficient conditions for the existence

and uniqueness of a positive solution in Dewatripont and Tirole (2005)’s communication game.

8For an excellent review of the literature on the failure to pass welfare-improving reform see Drazen (2000, Chap.10 and 13).

9This contrasts with models where politicians signal their credibility by undertaking too many reforms (seeRodrick, 1989).

10Dewatripont and Tirole consider a game with a unique sender.

7

3 The model

We analyze a one-period three-player game with two candidates (1 and 2 from parties 1 and 2,

respectively) and a representative voter. The candidates compete for an elected office which they

value. They campaign by taking position on some issue: they commit either to their party’s

traditional policy (pJ = 0, J ∈ {1, 2}) or to implement a reform (pJ = 1, J ∈ {1, 2}). A candidate

is either a competent or non competent politician, which is a candidate’s private information. We

use the notation t ∈ {C,NC} to denote respectively a competent and a non competent candidate.

It is common knowledge that the proportion of competent candidate is: p(t = C) = q. A reform

is beneficial to the voter (compared to a party’s traditional policy) only if it is implemented by a

competent politician.

The voter is uncertain of a candidate’s campaign manifesto. There is an exogenous probability, α,

that the voter observes a candidate’s platform before the election. A candidate and the voter can

increase the probability that the voter observes a candidate’s platform by investing in electoral

communication.

We assume that communication between candidates and the voter is a team effort. A candidate

and a voter need to exert some communication effort (effort of clarity for a candidate, effort of

attention for the voter, for example) for the voter to observe the candidate’s policy stance. We

model communication between a candidate and the voter as in Dewatripont and Tirole (2005).

When candidate J makes communication effort yJ ∈ [0, 1] and the voter makes communication

effort xJ ∈ [0, 1] towards candidate J, the probability that the voter observes the candidate’s

message is: yJ ∗xJ , J ∈ {1, 2}. Investing in communication is costly for both candidates. Listening

to what candidates have to say is also costly for the voter. Importantly, the players’ communication

effort is unobserved.

After players’ communication efforts, the probability that the voter observes candidate J’s platform

before the election is α+ (1−α)yJxJ , J ∈ {1, 2}. Since the focus of this paper is on the voter and

candidates’ communication efforts and how it affects the politicians’ incentives to provide policy

changes, we suppose that α = 0. This assumption alleviates notation and does not change any

result.

The timing of the game is:

1. Nature draws the the candidates’ type: tJ ∈ {C,NC}, J ∈ {1, 2}.

8

2. Each candidate observes (only) her type and chooses a platform:

• her party’s traditional policy: pJ = 0, or

• a new issue (reform): pJ = 1, J ∈ {1, 2}

3. The electoral campaign takes place:

candidates 1, 2, and the voter respectively exert communication effort y1, y2, and x = (x1, x2);

with probability yJ ∗ xJ , communication is successful: the voter observes candidate J’s plat-

form (pJ), otherwise the voter observes nothing

4. The voter receives a partisan shock: ε ∈ {(ε, 0), (0, ε)}, and chooses to elect one of the two

candidates: e = J, J ∈ {1, 2}

5. The elected candidate implements pJ and payoffs are realized

Note that candidates can only communicate their platform, they cannot credibly reveal their

type. Also, candidates implement the policy they have chosen.11 This implies that communication

affects only their chance of being elected, not their payoff.12

The utility function of the voter is:

uv(pe, x1, x2) = pe(ωG+ (1− ω)L) + (1− pe)εe − Cv(x1, x2), e ∈ {1, 2} (1)

where ω = I{te=C} (an indicator function equals to 1 when te = 1) and εe is the eth element of the

partisan shock vector ε ∈ {(ε, 0), (0, ε)}, ε > 0.

The voter’s utility function depends on the policy implemented by the elected candidate. When a

candidate implements her party’s traditional policy or owned issue, the voter’s payoff depends on

the partisan shock: εe ∈ {0, ε}, with Prob(ε1 = ε) = π ∈ (0, 1/2].13 When a candidate implements

a reform, the voter’s payoff depends on the politician’s competence. When his elected representa-

tive is competent, the voter gets a utility gain of G > 0. When she is non competent, the voter

11This can be justified by assuming, for example, that, in an unmodeled period 2, the voter receives informationabout candidates’ platform and is able to hold her elected representative accountable if she does not uphold hercommitment.

12We plan to study a version of the model when candidates are committed to their platform only when commu-nication is successful in a companion paper.

13Note that this is equivalent to Prob(ε = (ε, 0)) = π.

9

gets a utility loss of L < 0.

The distinction between parties and candidates corresponds to the idea that parties are infor-

mative labels (Downs, 1957; Kiewiet and McCubbins, 1991; Cox and McCubbins, 1993; Aldrich,

1995; Snyder Jr. and Ting, 2002), typically associated with well-defined policy position or “owned

issues” (Petrocik, 1996 and Petrocik et al., 2003). For example, right-wing parties are usually

associated with low taxes, deregulation, socially conservative policies, whereas left-wing parties

are associated with more redistribution, government intervention, and socially progressive policies.

These traditional partisan issues typically fluctuate in their relative importance for the voters,

who have a somewhat clear idea that voting for party would result in a certain set of policies (for

example, in the U.S., Republicans lowering taxes, Democrats expanding entitlements).

However, from time to time, some new issues arise and candidates tackle them. These issues might

be triggered by certain events (e.g., September 11 for national security, the 2008 financial crisis

for banking reform) or simply becoming gradually more important (e.g., inflation, public debt).

When candidates choose to campaign on these issues (whose payoff is uncertain), voters cannot

rely on party cues and have to be convinced that the candidate has the qualities to bring forward

positive change. For these issues, the candidate’s type is more important than the party she is

from.

In our model, we thus consider two sources of randomness in voters’ payoff: the relative importance

of the issues owned, and the candidate’s competence on the new issues. Although in real life these

two sources of randomness affect, to different degrees, every policy issue (whether owned or new),

in this paper, we keep these sources separated to develop our intuition in a tractable model.

Political communication is important for the voter since he is uncertain of a candidate’s platform

and competence. However, listening to candidates is costly for the voter (function Cv(.) in (1)).

This effort can be understood as the effort of deciphering a candidate’s message or the opportunity

cost of paying attention to the campaign (instead of undertaking other activities).

We make the following assumption regarding the voter’s payoff:

Assumption 1.

G ≥ G0 > ε

L = −τG, τ > q

1− q

10

The first inequality states that the voter’s gain from a reform when implemented by a compe-

tent politician is always higher than the maximum payoff he gets from a party’s traditional policy.

When ε > G, it is easy to check that every candidate (whatever her type) commits to her party’s

owned issue (pJ = 0, J ∈ {1, 2}). We also restrict the benefit from reform to be higher than some

exogenous value G0 to simplify the exposition of the results. It also corresponds to the situation

of interest for this paper, one when the voter has a lot to gain from competent candidates tackling

the new issue at hand.

The second inequality states that the cost of a reform implemented by a non competent politician is

such that ex-ante the voter prefers a party’s traditional policies to the reform (i.e., qG+(1−q)L <

0). A competent politician needs to convince the voter that she is indeed competent to be elected

when she campaigns on a reform. An equilibrium where a reform is implemented by a competent

politician is more difficult to sustain and political communication (the campaign) plays an impor-

tant role in this environment.

Candidate J (J ∈ {1, 2})’s utility is:

uJ(pJ , yJ ; t) = I{e=J}(1− ktpJ)− C(yJ) (2)

A candidate cares about holding office. She gets utility 1 if she is elected, 0 otherwise. However, if

elected, a candidate J must pay a cost to implement a reform (pJ = 1): kt > 0. The cost depends

on the level of competence of the candidate. It is less costly for a competent type to implement

the reform: kC < kNC < 1. Since kNC < 1, campaigning on a reform is not a strictly dominated

strategy for a type NC candidate.14

The cost paid by an elected politician corresponds to the assumption that writing a bill, convinc-

ing other political actors, in particular veto players in the political process, that the reform is

necessary takes time and effort and thus is costly (see Hall and Deardorff, 2006). It can also be

that an elected politician needs to accept projects she dislikes in exchange of getting her reform

passed (engage in log-rolling). The cost of implementing the reform can be related to the existence

of institutional arrangements which constrain an elected representative’s actions (veto players, fil-

ibuster rule, etc.).

14We can also assume that the politician cares about the voter’s welfare (as long as it weights it less than thegain from being elected). This does not affect the results of this paper as long as the weight puts on the voter’swelfare is small enough, but it complicates the exposition.

11

We also suppose that communicating with the voter is costly for candidates. This cost can be

assimilated to the difficulty of defining a clear message and getting across to the voter. It takes

time to define a clear message and money to disseminate this message.

In what follows, we make the following assumptions on the cost functions:

Assumption 2. We have: Cv(x1, x2) = cv(x1) + cv(x2)

For simplicity, we assume that the cost of listening to candidates is additively separable.15

Assumption 3. The cost functions cv(.) and C(.) satisfy the following properties:

i: cv(.) and C(.) are twice continuously differentiable and strictly convex

ii: c′v(0) = 0 = C ′(0) and limx→1 c′v(x) =∞ = limy→1C

′(y)

iii: c′′v(0) is bounded: c′′v(0) = c0 < q(1− q)G0

2

C ′′(0) is bounded: C ′′(0) = C0 <1−kNC

2

Assumptions 3.i and 3.ii are analogous to the assumptions on the cost of communication func-

tion in Dewatripont and Tirole (2005). Assumption 3.iii is novel and is a sufficient condition for

competent candidates and the voter to exert strictly positive communication effort when candi-

dates play a separating strategy.

Finally, we add the following assumption:

Assumption 4. c′′′v (.) ≥ 0 and C ′′′(.) ≥ 0

Assumption 4 is a sufficient condition for the uniqueness of candidates’ and the voter’s com-

munication strategies in a separating equilibrium when parties (and thus candidates) are ex-ante

identical (i.e., Prob(ε1 = ε) = 1/2).16

The equilibrium concept is Perfect Bayesian Equilibrium (PBE) excluding weakly-dominated

strategies.17 As it is customary, we assume that, when indifferent, the voter tosses a fair coin

15The main results of this paper are unchanged if we suppose that Cv(x1, x2) = cv(x1 +x2). Such a cost functioncomplicates the proofs without providing any additional insights with respect to the key results derived in thispaper.

16Uniqueness is not guaranteed when we have electoral imbalances (see Section 5).17A formal definition of the equilibrium can be found in Appendix A (see Definition 1).

12

to decide which candidate to elect. In what follows, the term ‘equilibrium’ refers to this class of

equilibrium.

Before solving the model, one can note that equations (1) and (2) and the assumption that

kC > 0 imply that the voter and the candidates have partly diverging goals. Both types of

candidate prefer implementing their party’s traditional issue (p = 0) rather a reform (p = 1). The

voter, through elections, tries to provide incentives for competent candidates, and only competent

candidates, to propose policy changes. Under imperfect information, this separating equilibrium

maximizes the voter’s expected payoff (see Appendix B). In the next section, we study under which

conditions a separating equilibrium exists.

4 Campaigns and reforms

In this section, we consider the case of no ex-ante electoral imbalance. The two parties (and thus

the two candidates) are ex-ante identical: party 2’s owned issue (p2 = 0) is as likely to be preferred

by the voter as party 1’s traditional policy (p1 = 0), Prob(ε1 = ε) = Prob(ε2 = ε) (or equivalently

π = 1/2). We focus on necessary and sufficient conditions such that a separating equilibrium

exists,18 and analyze their dependence on the model’s main parameters: the voter’s benefit from

reform (G) and a competent type’s cost of implementing the reform (kC). We focus on such an

equilibrium for two reasons. First, for a given gain from reform (G), a separating assessment max-

imizes voter’s welfare when a non-competent cost of implementing the reform is not too large (see

Appendix B).19 Second, under some conditions on the partisan shock, it is the only equilibrium

where only a competent candidate commits to a reform.

18We denote separating equilibrium an equilibrium when both candidates separate: a competent candidate Jchooses pJ = 1, a non competent candidate J chooses pJ = 0, J ∈ {1, 2}. This a slight abuse of the usualterminology.

19We cannot exclude the possibility that an asymmetric equilibrium, where one party (for example, party 1)separates and the other (party 1) pools on the reform, is better (in expectation) for the voter. In such an equilibrium,if it exists, the voter is hurt because he may elect a non-competent candidate who implements the reform. However,he elects with a high probability a competent candidate 1 when he faces a competent candidate 1 and a noncompetent candidate 2. This is because he elects a non competent candidate 2 only if communication is successfulwith candidate 2 and not successful with candidate 1. When a non competent politician’s cost of reform is high(kNC close to 1), the probability of electing a non competent candidate 2 is low. The probability of electing acompetent candidate 1 (when her opponent is non competent) is close to 1 and the voter can be better off than ina separating equilibrium where this probability is strictly less than 1.

13

We solve the model by backward induction. We first introduce some notation. Denote by

σJ(t) = (pJ(tJ), yJ(tJ)) ∈ 0, 1 × [0, 1] the strategy (policy choice and communication effort)

of a type tJ candidate J (tJ ∈ {C,NC}, J ∈ {1, 2}). The tuple of strategies is denoted by

ΣJ ≡ (σJ(C), σJ(NC)). Denote by mJ ∈ {∅, pJ} the outcome of candidate J;s campaign, i.e.

whether the message observed by the voter. If mJ = ∅ (mJ = pJ), communication has been unsuc-

cessful (successful). We denote by µ(mJ , xJ) the posterior’s belief that the candidate is competent

conditional on the voter observing communication mJ and his communication effort xJ . After

observing mJ and m−J , the voter elects candidate J rather than her opponent (-J) (J ∈ {1, 2}) if

and only if:

µ(mJ , xJ)(pJ(C)G+ (1− pJ(C))εJ) + (1− µ(mJ , xJ))(pJ(NC)L+ (1− pJ(NC))εJ) >

µ(m−J , x−J)(p−J(C)G+ (1− p−J(C))ε−J) + (1− µ(m−J , x−J))(p−J(NC)L+ (1− p−J(NC))ε−J)

(3)

, where (εJ , ε−J) ∈ {(ε, 0), (0, ε)}.

The voter elects the candidate that gives him the highest expected payoff. The expected payoff

depends on the outcome of the campaign. For the voter’s strategy to be a best response, equation

(3) must be satisfied ∀mJ , m−J , ΣJ , and Σ−J . As stated above, we suppose that the voter tosses

a fair coin if indifferent between the two candidates (if the inequality above holds with equality).

We now consider the communication strategies of the different players. We first show that

candidates do not necessarily invest in communication.

Lemma 1. In any equilibrium, a candidate exerts positive effort in communication if and only if

she chooses pJ = 1.

In this setting, candidates’ traditional partisan policy (p = 0) is like a default option. A candi-

date has thus no incentive to pay a cost to reveal that she commits to her default option. Inversely,

because the voter puts a high probability on a candidate promising no change when communication

is not successful, a candidate has to incur some strictly positive communication effort when she

commits to a reform.

Note that this lemma implies that a candidate faces a double cost when she chooses pJ = 1. There

is the cost of implementing the reform (kt). She pays this cost only if elected. Additionally, there

14

is the cost of communicating with the voter. A candidate bears this cost regardless of the electoral

outcome. The electoral incentives to commit to a reform (the increased probability of winning the

election when communication is successful) has thus to be higher than the sum of the implemen-

tation cost (kt) and the communication cost for a candidate to be willing to commit to the reform.

We first show that under some conditions on the party shock (ε), there is no equilibrium where

only one competent candidate promises change.

Proposition 1. ∃ ε > 0 such that ∀ε ≤ ε, there is no equilibrium where candidate J (J ∈ {1, 2})

separates (σJ(C) = (1, yJ(C)), yJ(C) ≥ 0 and σJ(NC) = (0, 0)) and her opponent pools on her

party’s owned issue (σ−J(C) = σ−J(NC) = (0, 0)).

In the remaining of the paper, we assume that the (positive) partisan shock is not too high

and satisfies the condition above. This condition is satisfied when reforms significantly improve

the voter’s welfare compared to parties’ usual policies and seems natural given the focus of this

paper.

With this assumption on the party shock, Proposition 1 implies that to avoid policy failures (a

reform implemented by a non competent type which lowers her payoff) or a “status quo” bias

(no politician proposes a reform), the voter needs to incentivize competent candidates, and only

competent candidates, from both parties to choose p = 1. We determine conditions such that a

separating equilibrium exists.

We now study the communication strategies when candidates separate (i.e. only competent type

proposes the reform). By Lemma 1, we know that, for a separating equilibrium to exist, competent

candidates and the voter must exert strictly positive communication effort. The next proposition

shows that this constraint is satisfied under Assumption 3. Furthermore, under Assumption 4, we

find that the competent candidates’ and voter’s equilibrium communication strategy is unique.

Proposition 2. In a separating equilibrium,

i. the communication effort of a type NC candidates J is: y∗J(NC) = 0, J ∈ {1, 2};

15

ii. competent candidates’ and the voter’s communication efforts are: y∗1(C) = y∗2(C) ≡ yC > 0

and x∗1 = x∗2 ≡ xv > 0, where yC and xv are (almost everywhere) uniquely defined by:20

C ′(yC) =1− kC

2xv (4)

c′v(xv) =q(1− q)G− ε2

yC (5)

We now consider under which conditions a separating assessment is incentive compatible. For

such an assessment to be an equilibrium, a competent candidate must prefer to propose pJ = 1

than committing to her usual party’s policy. Inversely, a non competent candidate must prefer

pJ = 0 given the other players’ strategy. Using the same reasoning as in Proposition 2, it is easy

to see that if a non competent candidate J (J ∈ {C,NC}) deviates and imitates a competent

candidate by proposing pJ = 1, she will exert a communication effort yNC :

C ′(yNC) =1− kNC

2xv

Using the convexity of C(.), we can see that yNC < yC . We thus find the following conditions for

the existence of a separating equilibrium.

Proposition 3. ∃! k∗C ∈ (0, 1) and k∗NC : [0, 1] → R+ such that a separating equilibrium exists if

and only if the following two conditions are satisfied:

kC ≤ k∗C (C1)

kNC ≥ k∗NC(kC) ≡ yNCxv − 2C(yNC)

1 + yNCxv − qyCxv(C2)

Proposition 3 shows that a separating equilibrium exists if two conditions are satisfied. First,

we need a competent candidate’s cost of implementing a reform to be low enough. If this cost

is too high, the electoral benefit of proposing welfare-improving change (increased probability of

winning the election) is too low compared to the total cost (implementation plus communication)

of committing to a reform. Second, it is necessary that a non competent politician’s cost of reform

is sufficiently high. Otherwise, a non-competent candidate benefits from imitating a competent

politician (and commit to the reform). Since a competent candidate basically uses her policy

20We cannot exclude an asymmetric strictly positive solution for knife-edge case associated with a zero-measureof the parameters’ space. In the rest of the analysis, we do not consider these knife-edge cases.

16

choice to signal her competence, this result is in line with intuition. However, contrary to standard

adverse selection model, a competent candidate’s threshold regarding the cost of implementing

the reform is not necessarily the same as a non competent politician’s threshold. Type separation

is not sufficient to guarantee the existence of a separating equilibrium as the following corollary

shows.

Corollary 1. ∀kC ≤ k∗C, we have: k∗NC(kC) ≥ k∗C, with strict inequality if kC < k∗C.

In traditional agency models, a separating equilibrium simply requires that the competent and

non-competent type’s costs are on the opposite side of a given threshold. We have additional

restriction on the cost of introducing a reform for the competent candidate due to the introduction

of political communication as a team effort (a la Dewatripont and Tirole, 2005). A non competent

candidate, when she deviates, free-rides on the competent politician’s and voter’s communication

efforts. Due to this free-riding, a type NC’s return on communication effort is comparatively

higher. To sustain a separating equilibrium, we need then that the electoral incentives to commit

to a reform are lower than the cost of communication plus cost of implementing a reform for a

non-competent candidate. This implies that a type NC’s cost of implementing the reform must be

strictly higher than the type C’s threshold to restore balance (to sustain a separating equilibrium).

It is thus necessary that the costs of reform for the two types are sufficiently apart.

The following lemma studies how the threshold values vary with the cost of a reform for the

competent type (kC) and the voter’s gain from a reform (G).

Lemma 2. We have that:

i. k∗C increases with G,

ii. k∗NC increases with G and decreases with kC.

Using Lemma 2, we can see that the voter may want to impose a cost on a competent candi-

date for implementing a reform (even keeping the non competent type’s cost constant). This is

a direct result of the electoral campaign. When the cost for a competent type is low, a compe-

tent candidate exerts more communication effort (because the return on communication is higher

since the payoff from holding office is greater). This increase in a competent politician’s commu-

nication effort increases the voter’s communication effort due to the complementarity in the team

17

production function. This, in turn, increases the return on communication (and on committing

to the reform) for a non-competent candidate. A low cost of implementing the reform creates a

communication externality which makes it more difficult to effectively screen competent politicians

through elections (a non-competent candidate’s threshold decreases). This implies the following

proposition.

Proposition 4. Assume kNC > k∗C, ∃! kC(G) ∈ [0, k∗C) such that a separating equilibrium exists if

and only if kC ≥ kC(G)

Furthermore, kC(G) is increasing with G (strictly if kC(G) > 0).

Corollary 2. A decrease in a competent politician’s cost of implementing a reform (kC) may

decrease the voter’s equilibrium expected payoff.

Propositions 3 has two important implications. First, it shows that we can find parameter

values such that a separating equilibrium exists. Second, Propositions 3 and 4 provide a rationale

for institutional arrangements making the implementation of reform difficult, such as veto players

or supermajority requirements. This rationale is completely unrelated to the traditional argument

of preventing a tyranny of the majority. Our model stresses a trade-off in the design of institutions.

Making policy changes easier implies that the voter can benefit from reforms which are moderately

beneficial (low G). However, a low cost of undertaking reforms also implies that elections have

a reduced screening power: commitment to reforms no longer signals competence, and reformist

candidates become more likely to generate policy failures, especially when reforms are most needed

(when G is high).21

Lemma 2 also shows the voter’s payoff and candidates’ incentive to separate are linked. This

link is generally absent from adverse selection models (see Prato and Strulovici (2011) for a similar

result, albeit in a mixed strategy equilibrium). When the voter has much to gain from a reform,

he is very attentive to what candidates have to say on the campaign trail: as G increases so does

xv. A higher benefit from reform facilitates successful communication between a candidate and

the voter. It also increases the probability that a candidate is elected if she campaigns on pJ = 1.

The cost of communicating with the voter decreases. Consequently, as G increases, we can sustain

21Obviously, it is hard to design institutions which affect only competent politicians’ cost of implementing areform. However, it is possible to design institutions which increase a competent type’s cost of reform more than anon-competent type. This is true, for example, if a non-competent politician is more willing to accept to provideporks to veto players in exchange of a reform getting passed.

18

a separating equilibrium for a higher type C’s cost of implementing the reform (in the sense that

the threshold defined in Proposition 3 increase).

But as G increases, the return on committing to a reform also increases, thereby making separation

no longer incentive compatible. As a consequence, an increase in the voter’s gain from a reform

increase both a competent and a non competent politicians’ incentive to promise change (both

thresholds decrease). Using Lemma 2, we can state the following proposition:

Proposition 5. ∃!kC > 0, kNC(kC) : [0, 1)→ [0, 1) such that, for any given kC ∈ (0, kC) and any

given kNC > kNC(kC), ∃! G ≥ G0, G > G such that a separating equilibrium exists if and only if

G ∈ [G,G).

This proposition relates the existence of a separating equilibrium to the voter’s benefit from a

reform. From Proposition 5, we can easily see that an increase in the voter’s gain from a reform

does not always benefit the voter as the following corollary shows. We thus find a non-monotonic

relationship between the voter’s gain from a reform (G) and the voter’s welfare.

Corollary 3. An increase in the voter’s benefit from the reform (G) may decrease the voter’s

equilibrium expected payoff.

In this paper, we can relate the voter’s gain from a reform to the likelihood that a reform is

successfully implemented (successfully in the sense of improving the voter’s welfare). Proposition

5 states that when the benefit from a reform is low, competent candidates do not have enough

electoral incentive to always commit to a reform. This suggests that the voter, at least with some

probability, faces two candidates campaigning on their party’s owned issue (p = 0). There is a

status quo bias when the voter’s benefit from reform is too low.

Conversely, when the benefit is high, a non competent politician has too much incentive to mimic

a competent one (by committing to a reform) and a separating equilibrium cannot exist.22 In fact,

a high benefit from reform implies that the voter listens attentively to politicians. This high level

of attention creates a communication externality: it is now cheap for a type NC to pretend to be

competent.

Proposition 5 and Corollary 3 imply that a reform is implemented with positive probability and, if

implemented, benefits the voter only if the voter’s gain from policy changes is in an intermediate

22From the proof of Proposition 1 in Appendix A, it is easy to check that when G is large, an equilibrium whereone candidate plays a separating strategy cannot exist.

19

range. When there is little impetus for policy change (for example, the economy is growing at a

reasonable rate so G is low), politicians will avoid to commit to reforms. Inversely, in time of crisis,

when reforms are much needed (the benefit is high), we should observe a relatively high number of

policy failure. In fact, the next proposition shows that it is possible to find an equilibrium where

candidates from one party pool on p = 1 (a competent and a non competent candidate propose

a reform) and candidates from the other party pool on p = 0 when G is large enough (and other

conditions are satisfied).23

Proposition 6. Suppose τ < q(1−kC)(1−q)(1−kNC)

. ∃ G > 0 such that ∀G > G, there exists an equilibrium

where candidates from party J pool on the new issue (ΣJ = ((1, ypJ(C)), (1, ypJ(NC))), where ypJ(t)

is the equilibrium communication effort) and candidates from party −J pool on their party’s owned

issue (Σ−J = ((0, 0), (0, 0))).

In the type equilibrium described in Proposition 6, an election then pits together a reformist

party against a party proposing no real change. The voter uses the electoral campaign not to

obtain better information, but to be sure to select the right candidate. The voter listens to the

candidate to understand exactly what reforms she will implement. In this case, the electoral cam-

paign serves as an imperfect screening device. Since successful communication is more likely to

come from a competent candidate, the reformist party can be preferred to the non reformist one.

However, when communication is not successful, the candidate from the non reformist party is

elected. Even though reforms are needed, even though the electorate knows that one party may

bring up changes, the reformist party is not certain to be elected: reforms are delayed (Alesina

and Drazen, 1991).

Our paper thus provides a new explanation on why crises are not necessarily associated to reforms

contrary to the ‘crisis hypothesis’. Our paper is in line with empirical findings which show a

weak correlation between crises and reforms (see Drazen and Easterly, 2001). Drazen and Easterly

(2001) show that an inflationary crisis seems to foster reforms. However, they find no support for

the hypothesis that countries reform more following (or during) a current account deficit or fiscal

deficit crisis. One explanation they advance for these results is that an inflationary crisis is easier

to solve: there is no need for special competence, a country just has to use devaluation. Our model

provides a theoretical formalization of this conjecture.

23The conditions such that there exists an equilibrium where both candidates pool on p = 1 are very stringent(proof available upon request).

20

In an election pitting a reformist party against a non reformist one, when the reformist party is

elected, there is a substantial chance that reforms will be unsuccessful (lower the voter’s payoff

compared to parties’ traditional policies). This type of policy failures were observed in Latin

America in the 1980’s. Period of high inflation and negative growth led to stabilization and liber-

alization attempts, some of them unsuccessful with deeply harmful consequences (see Sturzenegger

and Tommasi, 1998 and, in particular, Mondino, Sturzenegger, and Tommasi wherein).

So far, we have assumed that both parties (and thus candidates) are identical. In the next

section, we relax that assumption, and suppose that (without loss of generality the issue owned

by party 2 (p2 = 0) is more likely to be the one that the voter prefers. We show that a small

amount of electoral imbalance does not affect the voter. However, when electoral imbalance is

high, a separating equilibrium cannot exist and the voter is hurt.

5 Electoral imbalance and reforms

We now introduce electoral imbalance in the model studied in the previous section. We suppose

that (without loss of generality) party 2’s traditional policy is ex-ante favored by the voter over

party 1’s owned issue: Prob(ε = (ε, 0)) = π < 1/2. We consider how electoral imbalance affects

the existence of a separating equilibrium.

It is easy to check that Lemma 1 holds in this setting. We suppose, as in Section 4, that the

party shock ε is small enough such that there is no equilibrium when only one candidate plays

a separating strategy (see Proposition 1). The voter benefits from welfare improving reform and

is certain to avoid policy failure only in a separating equilibrium (competent candidates choose

p = 1 and non competent politicians choose p = 0). We first check that the voter and competent

candidates exert strictly positive communication effort when candidates play a separating strategy.

By Lemma 1, this is a necessary condition for a separating equilibrium to exist. Let’s define yaJ(tJ)

a type tJ candidate J ’s communication effort and xaJ the voter’s communication effort towards

candidate J (J ∈ {1, 2}, tJ ∈ {C,NC}) when party 2 is electorally advantaged. We get the

following proposition:

Proposition 7. In a separating equilibrium, we have:

21

i. yaJ(NC) = 0, J ∈ {1, 2}.

ii. ∃ π < 1/2, such that ∀π ≥ π, there exists yaJ(C) > 0, xaJ > 0, J ∈ {C,NC} defined by:

C ′(ya1(C)) =[(1− π)− q

2(1− 2π)ya2x

a2

](1− kC)xa1

C ′(ya2(C)) =[π +

q

2(1− 2π)ya1x

a1

](1− kC)xa2

c′v(xa1) = q(1− q)(1− π)Gya1(C)

c′v(xa2) = q(1− q)πGya2(C)

Because of electoral imbalance (party 2 is ex-ante advantaged), a type C candidate J’s commu-

nication effort (J ∈ {1, 2}) now depends on the communication effort of all the other players, and

not just on the voter’s communication effort towards J (xJ). However, as in the previous section,

we can find a strictly positive solution when electoral imbalance is not too high.

We can now study how communication changes as a candidate becomes more advantaged. In-

tuitively, the disadvantaged candidate has more incentive to invest in communication since her

electoral prospect depends on communication being successful. The voter should also listen more

to the disadvantaged candidate. The voter exerts communication effort to increase the probabil-

ity that she elects a competent candidate when the election is between a competent and a non

competent politicians: avoid making a mistake. The risk of mistake is higher when candidate

1 is competent and candidate 2 is not competent because ex-ante the voter favors candidate 2.

Therefore, one can suppose that the voter is willing to invest more communication effort towards

candidate 1. The following corollary shows that this intuition is correct for π close enough to 1/2.

The electoral campaign thus corrects for electoral imbalance as in Prato and Wolton (2013).

Corollary 4. ∃π ∈ [π, 1/2) such that xa1 > xa2, ∀π ∈ [π, 1/2)

The probability that the communication between the voter and the disadvantaged candidate

1 is successful is increasing as electoral imbalance increases (π decreases).24 This is because, as

explained above, the voter increases his communication effort towards candidate 1 to avoid making

a mistake (electing a non competent candidate 2 rather than a competent candidate 1 who will

implement welfare-improving changes). The reverse cannot be said for candidate 2 (probability of

24See Lemma 12.

22

successful communication does not necessarily decrease with electoral imbalance). This is because

the candidates’ communication effort are strategic complements, and for high electoral imbalance

the effect of higher effort by candidate 1 may trigger an increase in candidate 2’s effort for fear of

losing the election. Because of the complementarity of effort between candidates and the voter, we

cannot exclude that for large level of electoral imbalance, the voter listens more to candidate 2.

We now can show that for moderate political imbalance, a separating equilibrium exists under

some conditions on politicians’ cost of implementing a reform. First denote by yNCJ the communica-

tion effort of a non competent candidate J when she deviates (chooses pJ = 1 and communicates).

Using the same logic as in Lemma 10, it is easy to see that yNCJ is such that:

C ′(yNCJ ) =[(1− ΠJ)− q(1− 2ΠJ)ya−Jx

a−J]

(1− kNC)xaJ , J ∈ {1, 2}, Π1 = π, Π2 = 1− π

We have:

Proposition 8. ∃!kaC , kaNC(kC) : [0, 1]→ [0, 1] such that ∀π ≥ π a separating equilibrium exists if

and only if the following thee conditions are satisfied:

kC ≤ kaC (C3)

kNC ≥ kaNC (C4)

Proposition 8 shows that, despite electoral imbalances, a separating equilibrium still exists

under some conditions. The conditions are very similar to those described in Proposition 3. As

before, these conditions can be satisfied for some parameter values (see Proposition 5).

We study how the voter’s expected equilibrium payoff is affected by the introduction of a small

level of electoral imbalance. We find that the voter’s expected utility is unchanged.

Corollary 5. We have:dVv(x

a1, x

a2)

dπ

∣∣∣∣π=1/2

= 0

Unfortunately, without more structure on the communication cost functions, we cannot deter-

mine the impact on the voter’s expected utility of preferring a candidate for high level of electoral

23

imbalance. However, we can study how the level of electoral imbalance affects candidates’ propen-

sity to advocate for change (to propose p = 1). The next proposition shows that, when the level

of electoral imbalance is high, the voter cannot incentivize only competent candidates to commit

to reforms. This is because either a competent candidate 2 has little to gain from offering pol-

icy changes or a non competent disadvantaged candidate 1 has too much to gain from promising

reforms.

Proposition 9. ∃ π ∈ (0, 1/2) such that ∀π ≤ π there is no equilibrium where one or both

competent candidates choose p = 1.

When the level of electoral imbalance is large, the voter is not willing to listen to candidate 2

because he is almost certain to elect her when communication with candidate 1 is not successful.

But since the voter does not listen to her, candidate 2 has no interest in committing to a reform

(see Lemma 1 whose logic applies here). Therefore, the separating equilibrium breaks down. The

probability of welfare-improving change decreases when an election is not very competitive.25

When party 2’s owned issue is almost certain to be favored by the voter (π → 0), then the

voter also faces the risk of policy failure (that is, he risks electing a non competent candidate

who also campaigns on a reformist platform). To see that, suppose candidates separate. Then,

a non competent candidate 1 has almost no chance of being elected when she campaigns on her

party’s traditional policy. She wins with probability 0 when communication between the voter and

party 2’s candidate is successful and probability close to 0 when it is not. By deviating (choosing

p = 1), she would drastically increase her electoral prospects (from almost zero to a strictly positive

number) while still obtaining a positive payoff from holding office (since kNC < 1). Therefore, it

is not incentive compatible for her to keep proposing p = 0.

Lopsided election makes it difficult for the voter to obtain welfare-improving reforms. Notice

that this result holds despite the fact that our measure of lopsidedness is relatively weak (it affects

the voter’s payoff on the owned issues). When one candidate has a large electoral advantage, no

candidate may propose changes and the voter is either stuck with traditional policies, or he faces

the risk of policy failures. Competitive elections thus benefit the voter, as empirically documented

in Bowen and Mo (2012).

25For example, the probability that a welfare-improving change is implemented (i.e. the voter elects a competentcandidate) in a separating equilibrium is: q + q(1− q)(1− π)αa

1 + q(1− q)παa2 > q, where αa

J = xaJyaJ , J ∈ {1, 2}.

The probability that a welfare-improving reform is implemented when candidate 1 pools on p = 1 is: qαC1 < q,

where αC1 is the probability of successful communication with a competent candidate 1 in such an equilibrium (if it

exists).

24

Conclusion

In this paper, we consider a political agency model where the voter faces two candidates whose

competence is unobserved. Elections serve to select a competent candidate and provide incentives

to carry out welfare-improving reforms. Reforms improve the voter’s welfare only if implemented

by a competent politician, they are damaging otherwise. Both types of candidates need to pay

a cost to implement policy changes. The key innovation of this paper is that we model political

communication (arguably the most important aspect of an electoral campaign) as a team effort

between the voter and candidates. During the campaign, candidates communicate their platform

to the voter. The probability that the voter observes a candidate’s platform depends positively on

a candidate’s clarity, advertising effort and on the voter’s attention.

This model yields several interesting insights. First, a separating equilibrium, which maximizes

the voter’s welfare (fixing the benefit from reform), exists if and only if a competent candidate’s

cost of implementing a reform is low enough and candidates’ type separation is large enough. We

study how the voter’s benefit from a reform affects policy choices. When the voter gains little

from policy changes, a reform is never implemented. When the gain is too high, the voter faces

the risk of policy failures (the reform is implemented by non competent politicians). Our model

provides an explanation for a status quo bias or the higher likelihood of policy failures in time of

crisis (when the benefit from a successful reform is higher!). The political system works best when

the voter’s benefit from reform is in an intermediate range.

In addition, this paper provides a rationale for the existence of institutional arrangements

rendering policy changes difficult (such as veto players, supermajority requirements). When the

cost of implementing a reform is low for competent politicians, the likelihood of political failures

increases. This risk is exacerbated when the voter has much to gain from reforms. We also find

that the voter benefits from close races. The probability of a successful reform is higher when the

level of electoral imbalance is low.

The model may be extended in several dimensions. We consider only a representative voter.

It would be interesting to study how the presence of different groups of voters with different

cost of communication or different policy gain would affect our results. Our paper also studies

a pure common value environment. Candidates might instead compete on redistributive issues

that benefit only part of the population, and campaigns might affect the politicians’ propensity to

choose these issues (Morelli and Van Weelden, 2012). We believe that opening the black box of

25

political communication is a promising avenue for future research.

26

Appendix A: Proofs

Definition 1. Denote candidate J’s strategy: σJ(t) = (pJ(tJ), yJ(tJ , pJ)) ∈ {0, 1} × [0, 1], t ∈

{C,NC}, J ∈ {1, 2} and ΣJ = (σJ(C), σJ(NC))

Denote voter’s communication strategy: x = (x1, x2) ∈ [0, 1]2

Denote communication result mJ ∈ {∅, pJ}

Denote voter’s posterior she faces type C candidate J after communication result mJ : µ(mJ , xJ)

Denote voter’s electoral strategy (prob. elects Candidate 1): s1(m1,m2,x) ∈ [0, 1]

The strategies form a Perfect Bayesian Equilibrium if the following conditions are satisfied:

1) s1(m1,m2,x) =

1

1/2

0

⇔ Eµ(uv(p1, x1, x2)|m1,Σ1) T Eµ(uv(p2, x1, x2)|m2,Σ2)

2) yJ(tJ , pJ) = argmaxy∈[0,1] E(uJ(pJ , y; tJ)|x, s1,Σ−J), J ∈ {1, 2}, tJ ∈ {C,NC}

3) x = argmaxx,x′∈[0,1]2 E(uv(pe, x, x′)|s1,Σ1,Σ2)

4) ∀J ∈ {1, 2}, tJ ∈ {C,NC}, pJ(tJ) =

1

0⇔ E(uJ(1, yJ(tJ , 1); tJ)|x, s1,Σ−J) R E(uJ(0, yJ(tJ , 0); tJ)|x, s1,Σ−J)

5) µ(mJ , xJ) satisfies Bayes’ rule whenever possible

Proof of Section 4

We first prove Lemma 1. We introduce the following notation. Denote by Γ(σJ(t),Σ−J) the

probability that a type t candidate J is elected when she plays strategy σJ(t) and her opponent

plays Σ−J (t ∈ {C,NC}). The outcome of communication with a type t candidate J is: mJ(t) ∈

{∅, pJ(t)}. We have:

Γ(σJ(t),Σ−J) = E

[IA +

IB2|pJ(t), yJ(t); Σ−J

]where A is the event: µ(mJ , xJ)(pJ(C)G + (1 − pJ(C))ε) + (1 − µ(mJ , xJ)(pJ(NC)L + (1 −

pJ(NC))ε) > µ(m−J , x−J)(p−J(C)G + (1 − p−J(NC))ε) + (1 − µ(m−J , x−J))(p−J(NC)L + (1 −

p−J(NC))ε) and B is the event when both sides are equal

The expectation operator is over the probability of successful communication with candidate J,

candidate -J and candidate -J’s type.

It is obvious that Γ(σJ(t),Σ−J) is increasing with µ(pJ(t); ΣJ)(pJ(C)G + (1 − pJ(C))ε) + (1 −

µ(pJ(t); ΣJ))pJ(NC) and µ(∅; ΣJ)(pJ(C)G + (1 − pJ(C))ε) + (1 − µ(∅; ΣJ))(pJ(NC)L + (1 −

27

pJ(NC))ε).

We will use the following Lemma.

Lemma 3. There is no equilibrium where a competent candidate J chooses pJ(tJ = C) = 0 and

an non competent candidate J chooses pJ(tJ = NC) = 1.

Proof. The proof is by contradiction.

First, suppose a non competent candidate J plays σJ(NC) = (1, yJ(NC)), yJ(NC) > 0 and a

competent candidate J chooses pJ(C) = 0. A non competent candidate J’s expected utility is then:

UJ(1, yJ(NC);NC) = {yJ(NC)xJ ∗ [q(y−J(C)x−J∗

L{L≥µ(p−J (C),x−J )V−J (C)+(1−µ(p−J (C),x−J ))V−J (NC)}

+ (1− y−J(C)x−J)∗

L{L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})

+ (1− q)(y−J(NC)x−J∗

L{L>µ(p−J (NC),x−J )V−J (C)+(1−µ(p−J (NC),x−J ))V−J (NC)}

+ (1− y−J(NC)x−J)∗

L{L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})]

+ (1− yJ(NC)xJ) [q(y−J(C)x−J∗

L{µ(∅,xJ )∗0+(1−µ(∅,xJ )∗L≥µ(p−J (C),x−J )V−J (C)+(1−µ(p−J (C),x−J ))V−J (NC)}

+ (1− y−J(C)x−J)∗

L{(1−µ(∅,xJ ))L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})

+ (1− q)(y−J(NC)x−J∗

L{(1−µ(∅,xJ ))L≥µ(p−J (NC),x−J )V−J (C)+(1−µ(p−J (NC),x−J ))V−J (NC)})

+ (1− y−J(NC)x−J)∗

L{(1−µ(∅,xJ ))L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})]}

(1− kNC)− C(yJ(NC))

28

Where L{x≥y} =

1 if x > y

1/2 if x = y

0 if x < y

and V−J(t) = p−J(t)(I{t=C}G+(1−I{t=C})L)+(1−p−J(t))ε−J , t ∈

{C,NC}.

Since communication is costly, we have: C(yJ(NC)) > 0. Furthermore, we must have: µ(∅, xJ) >

0, so (1− µ(∅, σJ)))L > L. Therefore, we have:

UJ(1, yJ(NC);NC) < {q(y−J(C)x−J∗

L{(1−µ(∅,xJ )L≥µ(p−J (C),x−J )V−J (C)+(1−µ(p−J (C),x−J ))V−J (NC)}

+ (1− y−J(C)x−J)∗

L{(1−µ(∅,xJ ))L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})

+ (1− q)(y−J(NC)x−J∗

L{(1−µ(∅,xJ ))L≥µ(p−J (NC),x−J )V−J (C)+(1−µ(p−J (NC),x−J ))V−J (NC)})

+ (1− y−J(NC)x−J)∗

L{(1−µ(∅,xJ ))L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})}

(1− kNC)

≡ UJ(1, 0 : NC)

Therefore, a non competent candidate J has a profitable deviation and σJ(NC) = (1, yJ(NC))

cannot be an equilibrium strategy.

Now suppose a non competent candidate J plays σJ(NC) = (1, 0). Since the voter never

observes her policy stance, her choice of pJ(NC) does not affect her probability of being elected.

29

Therefore, we have:

UJ(1, 0 : NC) ≤{q(y−J(C)x−J∗

L{(1−µ(∅,xJ )L≥µ(p−J (C),x−J )V−J (C)+(1−µ(p−J (C),x−J ))V−J (NC)}

+ (1− y−J(C)x−J)∗

L{(1−µ(∅,xJ ))L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})

+ (1− q)(y−J(NC)x−J∗

L{(1−µ(∅,xJ ))L≥µ(p−J (NC),x−J )V−J (C)+(1−µ(p−J (NC),x−J ))V−J (NC)})

+ (1− y−J(NC)x−J)∗

L{(1−µ(∅,xJ ))L≥µ(∅,x−J )V−J (C)+(1−µ(∅,x−J ))V−J (NC)})}

≡ UJ(0, 0 : NC)

with strict inequality whenever one of the step functions above is strictly greater than 0. Therefore,

when σJ(C) = (0, yJ(C)), yJ(C) ≥ 0, we have that σJ(NC) = (1, yJ(NC)), yJ(NC) > 0 is strictly

dominated by σJ(NC) = (1, 0), which is weakly dominated by σJ(NC) = (0, 0). Since we exclude

weakly dominated strategies, the claim holds.

It is easy to understand why a non competent candidate never wants to choose p = 1 when

a competent type chooses p = 0. There must be a profitable deviation for the non competent

candidate since she separates from a competent one (which is bad for her) at a cost for her (which

is even worse).

Proof of Lemma 1. Necessity :

To prove necessity, we prove the counterpart: pJ = 0⇒ yJ = 0.

On the equilibrium path, given pJ(t) a type t candidate J chooses yJ(t) to maximize:

maxy≥0

Γ((pJ(t), y; Σ−J)(1− pJ(t)kt)− C(y), J ∈ {1, 2} t ∈ {C,NC} (6)

yJ(t) affects Γ(.; .) only through the probability that the voter observes mJ(t) = pJ(t).

Using Lemma 3, we just need to focus on two cases: 1) pJ(C) = pJ(NC) = 0 and 2) pJ(C) = 1

and pJ(NC) = 0.

Take case 1). We have: µ(mJ(t) = 0; ΣJ) ∗ 0 + (1 − µ(0; ΣJ)) ∗ 0 = 0 = µ(mJ(t) = ∅; ΣJ) ∗ 0 +

30

(1 − µ(∅; ΣJ)) ∗ 0. So it does not matter whether the voter observes mJ(t) = pJ(t) or mJ(t) = ∅

(because the voter anticipates candidates’ strategy). Since communication is costly, it must be

that: yJ(t) = 0.

Take case 2). We have: µ(mJ = 0; ΣJ) = 0. This implies that: µ(mJ(NC) = 0; ΣJ) ∗ G + (1 −

µ(0; ΣJ)) ∗ 0 = 0 < µ(mJ(NC) = ∅; ΣJ) ∗ G + (1 − µ(∅; ΣJ)) ∗ 0. The strict inequality comes

from the fact that the voter does not observe a candidate’s message with probability 1 (since

C ′(y) → −∞ as y tends to 1). So we have: µ(mJ(t) = ∅; ΣJ) > 0. Since Γ(., .) is increasing with

µ(mJ(t); ΣJ) ∗ pJ(C)G+ (1−µ(mJ(t); ΣJ)) ∗ pJ(NC)L, a type NC candidate J wants to minimize

the event that the voter observes mJ = 0. Since, in addition communication is costly, it must be

that a type NC candidate J chooses yJ(NC) = 0 when pJ(NC) = 0 and pJ(C) = 1.

Sufficiency:

Now consider the case of a candidate choosing p = 1. Using Lemma 3, we just need to focus on

two cases: 1) pJ(C) = pJ(NC) = 1 and 2) pJ(C) = 1 and pJ(NC) = 0.

Take case 1). Suppose both types choose y = 0. Then using the same reasoning as in Lemma 3,

we can see that σJ(1, 0) is weakly dominated by (0, 0) so it cannot be an equilibrium.

Suppose only a non competent type communicates. We have then: µ(mJ(t) = 1; ΣJ) ∗ G + (1 −

µ(1; ΣJ)) ∗ L = L < µ(mJ(t) = ∅; ΣJ) ∗G+ (1− µ(∅; ΣJ)) ∗ L. So a non competent type does not

want to communicate (since communication is costly and reduces her electoral chances). Therefore,

it cannot be an equilibrium.

Suppose only a competent type communicates. Then, we have using the same reasoning as in

Lemma 3, that σJ(NC) = (1, 0) is weakly dominated by (0, 0) so it cannot be an equilibrium.

Therefore, the only possibility left is that: yJ(C) > 0 and yJ(NC) > 0 when pJ(C) = pJ(NC) = 1

is on the equilibrium path.

Lastly, consider case 2). Suppose yJ(C) = 0. Then, as above, we can easily show that σJ(C) =

(1, 0) is weakly dominated by (0, 0) since kC > 0. This implies that pJ(C) = 1 cannot be an

equilibrium choice when yJ(C) = 0.

Summarizing this, we get p = 1 is an equilibrium choice only if y = 1 which completes the

proof.

Lemma 4. Suppose candidate J (J ∈ {1, 2}) separates (σJ(C) = (1, yJ(C)), yJ(C) ≥ 0 and

σJ(NC) = (0, 0)) and her opponent pools on her party’s owned issue (σ−J(C) = σ−J(NC) = (0, 0)).

31

This assessment is an equilibrium only if µ(mJ = ∅, xJ)G < ε.

Proof. The proof is by contradiction. Suppose candidate 1 separates and candidate 2 pools on

p = 0. Suppose these strategies are part of an equilibrium.

Comes the election stage, the voter’s expected utility from electing candidate 2 is ε2 ∈ {0, ε}.

The voter’s expected utility from electing candidate 1 is: G if m1 = 1 and µ(∅) ∗G if m1 = ∅. But

since C ′(1) → ∞, we must have: y∗1(C) < 1 (see Dewatripont and Tirole, 2005). Thus we have

µ(∅, x1) > 0.

It is thus a strictly dominated strategy for the voter to elect candidate 2 whatever the outcome

of the communication subgame is. Since the communication subgame does not change the voter’s

choice, the voter’s optimal communication effort is: x∗1 = 0. Since the voter never listens to

candidate 1, candidate 1’s communication effort must be: y∗1(C) = 0.

The reasoning above implies that when candidate 1 separates and her opponent pools on p = 0,

a competent candidate 1’s equilibrium strategy is: σ1(C) = (1, 0). But from Lemma 1, we know

that (1, 0) cannot be an equilibrium strategy. Hence we have reached a contradiction.

Proof of Proposition 1. Suppose candidate J separates (ΣJ = ((1, y∗J(C)), (0, 0))) and candidate -J

pools on her owned issue (Σ−J = ((0, 0), (0, 0))).

Using a similar reasoning as in the proof of Proposition 2 and Lemma 7 below, it is easy to check

that the voter and candidate J’s communication effort increases in G. Denote limG→∞ µ(∅, xJ) =

µ(∅, xJ). From Lemma 4, we have µ(∅, xJ) > 0.

By Assumption 1, we know that G ≥ G0 and by definition µ(∅, xJ) ≥ µ(∅, xJ), ∀G ≥ G0. Denote

ε = µ(∅, xJ) ∗ G0 > 0. Then by Lemma 4, the strategies above cannot be part of an equilibrium

∀ε ≤ ε.

Lemma 5. A separating equilibrium exists only if µ(mJ = ∅, x∗J)G < µ(m−J = ∅, x∗−J)G+ ε, ∀J ∈

{1, 2} almost everywhere, where x∗ = (x∗1, x∗2) is the voter’s communication effort.

Proof. The proof is by contradiction. First, suppose µ(mJ = ∅, x∗J)G > µ(m−J = ∅, x∗−J)G + ε.

Since by Lemma 1, we must have y∗J(NC) = 0, J ∈ {1, 2}, the above inequality implies that a type

NC candidate -J is never elected. In fact, the voter always elects candidate J when both candidates’

communication is not successful by (3). Her expected utility is 0. It is easy to check that if a

type NC candidate -J pretends to be competent by choosing strategy σ−J(NC) = (1, y−J(NC)),

where y−J(NC) is her optimal communication effort, her expected utility is strictly positive (see

32

the proof of Proposition 3 for more details). Therefore, a type NC candidate -J prefers to commit

to a reform and a separating equilibrium is impossible.

The knife-edge case µ(mJ = ∅, x∗J)G = µ(m−J = ∅, x∗−J)G + ε requires conditions (available upon

request) which may be satisfied for a set of parameter values with measure 0. It is excluded from

the analysis.

Proof of Proposition 2. By Lemma 1, we have: y∗J(NC) = 0, J ∈ {1, 2}.

Consider now a competent candidate. Without loss of generality (WLOG), we focus on a (compe-

tent) candidate 1. She takes as given her opponent’s communication effort (y2) and of the voter

x = (x1, x2). Her expected utility, when she chooses communication effort y1, is:

V1(1, y1;C) = (1− q)(y1x1 +

1− y1x12

)(1− kC)

+ q

(y1x1 ∗ (1− y2x2) +

y1x1 ∗ y2x22

+(1− y1x1)(1− y2x2)

2

)(1− kC)− C(y1)

When a competent candidate is elected, she gets 1 − kC , and 0 otherwise. When she faces a non

competent candidate, she wins the election with probability 1 when communication is successful

(this occurs with probability y1x1). When communication is unsuccessful, she wins with probability

1/2. She knows that the voter will elect her only if the voter’s partisan shock is favorable to party

1 (ε = (ε, 0)) by Lemma 5). This occurs with probability 1/2 by assumption. When she faces

a competent candidate 2, she wins with probability 1 when her communication with the voter

is successful and her opponent’s is not, with probability 1/2 when both communication efforts

are successful (since the voter is indifferent) or unsuccessful (by Lemma 5), and probability 0,

otherwise. In all cases, she has to pay her cost of communication.

After rearranging, we get that a competent candidate 1 chooses her communication effort y1 to

maximize:

maxy1∈[0,1]

(1 + y1x1

2

)(1− kC)− q(1− kC)

y2x22− C(y1)

We get the following FOC:

C ′(y∗1(C)) =1− kC

2x1

Similarly, for a competent candidate 2, we get: C ′(y∗2(C)) = 1−kC2x2.

33

Now let’s consider the voter’s communication effort. He chooses x such as to maximize:

maxx1,x2∈[0,1]2

q2 ∗G+ (1− q)2 ∗ 0 +

1︷ ︸︸ ︷(1− q)

2︷︸︸︷q (y2x2 ∗G+ (1− y2x2) ∗ (G+ ε)/2)+

+(1− q)qG+ε+y1x1(G−ε)2

+ (1− q)2ε− cv(x1)− cv(x2)

In a separating assessment, using (3), the voter randomizes between both candidates when com-

munication with both is successful. When communication with both candidates is not successful,

the voter selects a candidate according to the partisan shock he observed by Lemma 5. When

communication is successful only with Candidate 1 (2), the voter elects Candidate 1 (2).

When the voter faces two competent candidates (probability q2), investing in communication is

useless in a separating assessment since the candidate will implement the reform no matter who

is elected. When the voter faces two non competent candidates (probability (1− q)2), the voter’s

communication effort is wasted since no candidate invests in communication and both candidates

implements their traditional partisan platform if elected. When the voter faces a competent can-

didate and a non competent one, the voter’s communication effort is useful since it increases the

probability that the voter will select the competent politician.

We thus have the following FOC:

c′v(x∗1) =q(1− q)G− ε

2y1

c′v(x∗2) =q(1− q)G− ε

2y2

We can see that y∗J(C) and x∗J (J ∈ {1, 2}) is defined by the following system of two equations:

C ′(y∗J(C)) =1− kC

2x∗J

c′v(x∗J) =q(1− q)G− ε

2y∗J(C), J ∈ {1, 2}

It is easy to check that yJ = 0 = xJ is always a solution to this system of equations. However, we

need to prove the existence of a strictly positive solution.

We now show that there exists a unique strictly positive solution to the system above. Denote:

h(x) = q(1− q)G− ε2

(C ′)−1(

1− kC2

x

)− c′v(x)

34

By Assumption 3.i, this function is continuously differentiable.

A necessary condition for the existence of a strictly positive y∗J(C) and x∗J , J ∈ {1, 2} is that the

function h(x) has a 0 on (0, 1). We can see that h(0) = 0 and limx→1 h(x) = −∞. Therefore, it is

sufficient that h′(0) > 0. We have:

h′(0) =q(1− q)G−ε

21−kC

2

C0

− c0

Since C0c0 < q(1 − q)G−ε2

1−kC2

by Assumption 3.iii, we have that h′(0) > 0. Hence there exists a

strictly positive solution to (4) and (5).

This solution is unique if h′′(x) ≤ 0. Using chain rules, we get:

h′′(x) = −q(1− q)G−ε

2

(1−kC

2

)2C ′′′((C ′)−1

(1−kc2x))

C ′′((C ′)−1

(1−kc2x))3 − c′′′v (x)

Since C(.), C ′(.) and c′v(.) are convex, we have that h′′(.) ≤ 0.

This implies that y∗1(C) = y∗2(C) and x∗1 = x∗2 and the equilibrium communication strategy is

unique as claimed.

Before proving Proposition 3, we show Lemmata 6-7.

Lemma 6. We must have: C ′′(yC)c′′v(xv) > q(1 − q)G−ε2

1−kC2

, where yC and xv are the solutions

to (4) and (5).

Proof. Using the properties of h(x), defined in Proposition 2, we know that we must have: h′(xv) <

0 (since h(x)x→1−−→ −∞ and h′′(x) ≤ 0). We have:

h′(xv) =q(1− q)G−ε

21−kC

2

C ′′((C ′)−1

(1−kC

2xv)) − c′′v(xv)

=q(1− q)G−ε

21−kC

2− C ′′(yC)c′′v(xv)

C ′′(yC)

Where we use C ′(yC) = 1−kC2xv > 0 by Proposition 2.

Therefore, we must have C ′′(yC)c′′v(xv)− q(1− q)G−ε21−kC

2> 0.

Lemma 7. The communication effort of a competent candidate and of the voter (resp. yC and xv

defined in Proposition 2) have the following properties:

1. ∂yC

∂kC< 0 and ∂xv

∂kC< 0

35

2. ∂yC

∂G> 0 and ∂xv

∂G> 0

Proof. We only show point 1. Point 2. follows using the same reasoning. By the Implicit Function

Theorem (IFT), we have:

∂yC

∂kCC ′′(yC) = −xv

2+

1− kC2

∂xv∂kC

∂xv∂kC

c′′v(xv) = q(1− q)G− ε2

∂yC

∂kC

Rearranging, we get:

∂yC

∂kC= −

xv2c′′v(xv)

C ′′(yC)c′′v(xv)− q(1− q)G−ε21−kC

2

∂xv∂kC

c′′v(xv) = q(1− q)G− ε2

∂yC

∂kC

We know, by Lemma 6, that C ′′(yC)c′′v(xv) > q(1− q)(G− ε)(1−kC)/4. So we must have: ∂yC

∂kC< 0

and ∂xv∂kC

< 0.

Proof of Proposition 3. From Proposition 2, we know competent candidates’ and the voter’s com-

munication effort when the candidates play a separating strategy.

We first check that a competent candidate prefers to campaign on pJ = 1 (with communication

effort y∗J(C)) than deviate and choose to uphold the status quo (pJ = 0). When a competent

candidate chooses pJ = 1, she gets:

VJ(1, y∗J(C);C) =1 + y∗J(C)x∗J

2(1− kC)− qy∗−J(C)x∗−J(1− kC)− C(y∗J(C))

=1 + (1− q)yCxv

2(1− kC)− C(yC)

where the second line comes from the fact that we have y∗J(C) = yC , J ∈ {1, 2} and x∗J = xv, J ∈

{1, 2} (see Proposition 2).

When she deviates and chooses to campaign on issue Q, she gets:

VJ(0, 0;C) =1− q

2+ q

1− y∗−J(C)x∗−J2

=1− qyCxv

2

She has 50% chance of being elected against a non competent candidate and against a competent

candidate when communication is not successful. She gets 1 when she is elected since she does not

36

implement a reform. By Lemma 1, she does not exert any communication effort when she chooses

pJ = 0.

We have that a competent candidate prefers pJ = 1 to pJ = 0 if and only if: VJ(1, yC ;C) ≥

VJ(0, 0;C) which after rearranging is equivalent to yCxv−2C(yC)1+(1−q)yCxv ≥ kC .

We know that yC and xv are functions of kC (as well as G and q, see (4) and (5)). Using Lemma 7,

we know that yC and xv are decreasing with kC . Using the Envelope Theorem (and (4)), we get:

dVJ(1, yC ;C)

dkC=− 1 + qyCxv

2+

(1− q)yC∂xv/∂kC − qxv∂yC/∂kC2

(1− kC) (using FOC)

<− qxv∂yC/∂kC2

(1− kC) < −qxv∂yC/∂kC2

We also have:

dVJ(0, 0;C)

dkC=− qy

C∂xv/∂kC + xv∂yC/∂kC

2

>− qxv∂yC/∂kC2

So it is clear that d(V1(1, yC ;C)−V1(0, 0;C))/dkC < 0. So, if it exists, there is a unique k∗C defined

as the solution to V1(1, yC ;C) = V1(0, 0;C)⇔ yCxv−2C(yC)

1+qyCxv= kC such that the (IC) of a competent

type is satisfied for all kC ≤ k∗C .

To show existence, remember xv and yC are strictly positive. The objective function of a com-

petent candidate J is: VJ(1, y : C) =(

1+y∗J (C)xv2

)(1 − kC) − q(1 − kC)

y∗−J (C)xv

2− C(y). Take

kC → 0, we have: VJ(1, yC ;C) > VJ(1, 0;C) =1−qy∗−J (C)xv

2= VJ(0, 0;NC). Furthermore, we

know that yC < 1 and xv < 1. It is easy to see that: ∀kC , yCxv−2C(yC)1+(1−q)yCxv < 1−2C(yC(kC=0))

2−q = k′,

where k′ > 0 since by optimality of yC , we must have: 2C(yC) < xvyC < 1. So at kC = k′, we

have: V1(1, yC ;C) < V1(0, 0;C). By the Intermediate Value Theorem, k∗C exists. From the reason-

ing above, k∗C > 0 and it is easy to check that kC < 1 (or else p = 0 is clearly a profitable deviation).

We now consider the incentives a non competent candidate. When she chooses pJ = 0, she

gets:

VJ(0, 0;NC) =1− qyCxv

2

37

When she campaigns on pJ = 1, she invests yNC in communication. Her expected utility is then:

VJ(1, yNC ;NC) =

(1 + yNCxv

2

)(1− kNC)− q(1− kNC)

yCxv2− C(yNC)

A non competent candidate prefers pJ = 0 to pJ = 1 if and only if: VJ(0, 0;NC) > VJ(1, yNC ;NC).

This reduces to condition C2. To see uniqueness, note that dVJ(1, yNC ;NC)/dkNC = −1+yNCxv−(1−q)yCxv2

<

0 and dVJ(0, 0;NC)/dkNC = 0. To prove the existence of k∗NC , we apply the same reasoning as in

the existence of k∗C . Since VJ(0, 0;NC) and VJ(1, yNC ;NC) depend on yC and xv, which depends

on kC , it is clear that k∗NC depends on kC .

Proof of Corollary 1. From Lemma 2, we know that k∗NC(kC) is decreasing with kC . It is thus

sufficient to prove that k∗NC(k∗C) = k∗C to prove the Corollary.

Suppose kC = k∗C . When kNC = k∗C , then yNC = yC and V (1, yNC ;NC) =1+

=yC︷︸︸︷yNC xv−(1−q)yCxv

2(1−

k∗C)−C(yNC) = V (0, 0;NC), where the last equality follows from the definition of k∗C . This implies

that k∗NC(k∗C) = k∗C .

Lemma 8. k∗C is increasing with yC and xv.26

Proof. k∗C is defined as the unique solution to k∗C = yCxv−2C(yC)1+(1−q)yCxv . It is easy to check that the

LHS is increasing with xv. To see that it is increasing with yC , denote R(yC) = yCxv−2C(yC)1+qyCxv

and

S(yC) = (xv− 2C ′(yC))(1 + qyCxv)− qxv(yCxv− 2C(yC)). We have: sign(R′(yC)) = sign(S(yC)).

We have:

S(yC) = (xv − (1− k∗C)xv)(1 + qyCxv)− qxv(yCxv − 2C(yC))

= xvk∗C(1 + qyCxv) + qxv(2C(yC)− xvyC)

= (1− q)xv(xvyC − 2C(yC)) > 0

The first line comes from (4), the last line from k∗C > 0 by Proposition 3.

Using these two results, we see that we must have k∗C increasing with yC and xv.

Lemma 9. k∗NC is increasing with yC and xv (and does not depend on yNC).

26Remember that in the definition of k∗C , yC and xv are both evaluated at kC = k∗C (see Proposition 3).

38

Proof. k∗NC is defined by: k∗NC = yNCxv−2C(yNC)1+yNCxv−(1−q)yCxv . It is obviously increasing with yC .

Regarding xv, we know that ∂k∗NC/∂xv has the same sign as: yNC(1 + yNCxv − (1 − q)yCxv) −

(yNC − (1− q)yC)(yNCxv − 2C(yNC)) which reduces to: yNC + (yNC − (1− q)yC)2C(yNC). Since

yNC − (1− q)yC > −1 and yNC > yNCxv. We have yNC + (yNC − (1− q)yC)2C(yNC) > yNCxv −

2C(yNC) > 0. (We know from Proposition 3 that k∗NC > 0⇔ yNCxv − 2C(yNC) > 0).

From the Envelope Theorem, we can see that k∗NC does not depend on yNC .

Proof of Lemma 2. From Lemma 7, we know that xv and yC increase with G and decrease with

kC .

k∗C is increasing with xv and yC (see Lemma 8). Therefore, we have that k∗C increases with G.

k∗NC is increasing with yC and xv (and it does not depend on yNC , see Lemma 9). Therefore, we

have that k∗NC increases with G and decreases with kC .

Proof of Proposition 4. We first prove necessity.

By condition (C2)), we know that a separating equilibrium exists only if kNC ≥ k∗NC(kC , G)

(slightly abusing notation).

Suppose kNC > k∗NC(0, G). By Proposition 3 and Lemma 2, we know that a separating equilibrium

always exists then. We can thus note: kC(G) = 0 < k∗C . It is clear that kC(G) is constant with G

in this case.

Suppose now kNC ≥ k∗NC(0, G). By Corollary 1 (k∗NC(k∗C , G) = k∗C < kNC) and Lemma 2 (k∗NC(.)

increases with kC), then there exists a unique kC(G) such that kNC ≥ k∗NC(kC , G)⇒ kC ≥ kC(G)

where kC(G) ∈ [0, k∗C) is implicitly defined by kNC = k∗NC(kC(G), G) (theorem of intermediate val-

ues). We know that k∗NC(k∗C(G), G) = k∗C by Corollary 1. Therefore, by Lemma 2, given kNC > k∗C ,

we must have kC(G) < k∗C .

Using the definition of kC(G) above and the implicit function theorem, it is easy to see that kC(G)

strictly increases with G by Lemma 2.

We now prove sufficiency.

Consider the following assessment:

• The candidates’ strategies are: ΣJ = ((1, yC), (0, 0)), J ∈ {C,NC}, yC defined in Proposition

2;

• The voter’s communication strategy is: x∗ = (xv, xv), xv defined in Proposition 2;

39

• The voter’s electoral strategy is: s(m1 = 1,m2 = ∅,x∗) = 1, s(m1 = 1,m2 = 1,x∗) =

1/2, s(m1 = ∅,m2 = 1,x∗) = 0, s(m1 = ∅,m2 = ∅,x∗) =

1 if ε1 = ε

0 otherwise

It is easy to check that the voter’s electoral strategy is a best response to the candidates’ strategies

given the voter’s Bayesian posterior. The communication efforts are best responses according to

Proposition 2. Lastly, given kNC ∈ (k∗C , 1), the candidates’ policy choices (and strategies) are

incentive compatible for any kC ∈ (kC(G), k∗C) (0 ≤ kC(G) < k∗C < 1 by the reasoning above and

Proposition 3). Thus, the assessment described above is an equilibrium according to Definition 1

if kC ∈ (kC(G), k∗C).

Proof of Corollary 2. Suppose for a given G and kNC > k∗C that a separating equilibrium (detailed

in Proposition 4) exists. Using Lemma 2, we can see that this separating equilibrium can break

down following a decrease in kC in the case of kC close to kC(G) (kNC close to k∗NC). Since a

separating assessment maximizes the voter’s expected payoff for the voter for a given G, the claim

holds.

Proof of Proposition 5. We first prove necessity.

Proposition 3 defines necessary and sufficient conditions such that candidates separate. Denote

kC = limG→∞ k∗C .27 If kC > kC , no candidate ever chooses pJ = 1. We thus suppose that kC < kC .

We know that k∗C increases with G (Lemma 2). We also have limG→0 k∗C = 0. To see that, note

that xv = 0 when G = 0. This implies yC = 0. A competent candidate gets (1 − kC)/2 if she

chooses pJ = 1 and 1/2 if she chooses pJ = 0. Therefore, we must have: limG→0 k∗C = 0.

We thus have: limG→0 k∗C = 0 < kC < kC . By the Theorem of Intermediate Values and Lemma 2,

there exists G1 such that for k∗C(G1) = kC and k∗C(G) < kC , ∀G > G1.

We now have two cases to consider: i) G1 ≥ G0: in this case denote G = G1, ii) G1 < G0: in this

case denote G = G0. Furthermore, denote kC , the value of kC such that G1 = G0. It is easy to

check that ∀kC > kC , we have G1 > G0 by Lemma 2.

We now define the upper bound on G. There exists a separating equilibrium only if kNC ≥

k∗NC(kC).

We have that k∗NC(kC) increases with G (see Lemma 2). Therefore, there exist G, with possibly

27Under Assumptions 3-4, we have that yC and xV are continuous and bounded in G. This implies that k∗C iscontinuous and bounded in G (see the proof of Proposition 3). Therefore, the limit is well-defined.

40

G→∞, such that ∀G > G, k∗NC(kC) > kNC .

We need to show now that G > G or else a separating equilibrium does not exist. First suppose

G1 ≥ G0. Then, by definition, we have: k∗C(G1) = k∗C(G) = kC so k∗NC(k∗C(G)) = kC (by Corollary

1). Since kNC > kC by assumption, a separating equilibrium exists when G = G and thus we must

have G > G. In this case, define the function kNC(kC) = kC

Now suppose that G1 < G0 ⇔ kC < kC . In this case, define kNC(kC) = k∗NC(kC , G0) (slightly

abusing notation). One can check using Proposition 3 that kNC(0) < 1. Since k∗NC(kC) decreases

with kC so we have: kNC(kC) < 1.

Given any kC ∈ (0, kC) and kNC > kNC(kC), we thus have that ∃!G ≥ G0 and G > G such that a

separating equilibrium exists only if G ∈ [G,G).

Sufficiency follows the same logic as in the proof of Proposition 4.

Proof of Corollary 3. Suppose for a given kC and kNC that a separating equilibrium (detailed in

Proposition 5) exists. Using Lemma 2, we can see that this separating equilibrium can break down

following an increase in G in the case of G close to G (kNC close to k∗NC). Since a separating

assessment maximizes the voter’s expected payoff for the voter for a given G, the claim holds for

a sufficiently small increase in G.

Proof of Proposition 6. Without loss of generality, let’s suppose that candidates from party 1 sep-

arate: p1(C) = p1(NC) = 1 and p2(C) = p2(NC) = 0.

We know that these strategies are part of an equilibrium if the following conditions hold:

1. there is no communication effort between the voter and candidate 2: y∗2(C) = y∗2(NC) =

x∗2 = 0;

2. the voter and candidates from party 1 exert strictly positive communication effort;

3. the voter elects candidate 1 if communication is successful and candidate 2 otherwise;28

4. the candidates’ strategies are incentive compatible.

Point 1 follows directly from Lemma 1.

From Lemma 1, we also know that we must have x∗1 > 0 y∗1(t) > 0, t ∈ {C,NC}. Suppose the

28This condition is only sufficient. In an asymmetric equilibrium, the voter may elect candidate 1 only whencommunication is successful and the partisan shock does not favor party 2 (i.e., ε2 = 0).

41

voter elects candidate 1 after observing successful communication. We check below that it is the

case under the conditions stated in the text of the proposition.

The expected utility of a type t candidate 1 is: V1(1, y1(t); t) = y1(t)x1(1−kC)−C(y1(t)). Candidate

1 is elected if and only if communication is successful. We can see that the communication effort

of a type t candidate 1 is:

C ′(y∗1(t)) = (1− kt)x1, t ∈ {C,NC}

The voter maximizes his expected utility with respect to x1:

Vv(x1, 0) = (1− q)(y1(NC)x1L+ (1− y1(NC)x1) ∗

ε

2

)+ qy1(C)x1

(G− ε

2

)+ q

ε

2− cv(x1)

Since candidate 2 does not invest in communication, without loss of generality we can restrict our

attention to the case when x2 = 0.

The voter maximizes his expected utility with respect to x1. Taking the FOC and using Assumption

1, we get:

c′v(x∗1) = qy∗1(C)

(G− ε

2

)− (1− q)y∗1(NC)

(τG+

ε

2

)Denote H(x) = q

(G− ε

2

)(C ′)−1((1 − kC)x) − (1 − q)

(τG+ ε

2

)(C ′)−1((1 − kNC)x) − c′v(x). A

necessary condition to have an equilibrium is that H(x) has a zero on (0, 1). We can check that

H(0) = 0 and H(x)x→1−−→ −∞. Therefore, a sufficient condition is H ′(0) > 0. We have:

H ′(0) =q(G− ε

2

)(1− kC)− (1− q)

(τG+ ε

2

)(1− kNC)− C0c0

C0

We have H ′(0) > 0 ⇔ G[q(1 − kC) − τ(1 − q)(1 − kNC)] > C0c0 + [q(1 − kNC) + (1 − q)(1 −

kNC)]. Note that the left hand side is strictly positive given the assumption on τ . Denote G =

C0c0+[q(1−kNC)+(1−q)(1−kNC)]q(1−kC)−τ(1−q)(1−kNC)

. We have G > G⇔ H ′(0) > 0. Denote xp1 and yp1(t) the communication

effort of respectively the voter and a type t politician (t ∈ {C,NC}) which maximizes the voter’s

expected payoff and solves the system of equation.

c′v(xp1) = qyp1(C)

(G− ε

2

)− (1− q)yp1(NC)

(τG+

ε

2

)C ′(yp1(t)) = xp1(1− kt), t ∈ {C,NC}

We now determine conditions under which the voter elects candidate 1 when communication is

42

successful. First, by Assumption 1 and kC < kNC , it is clear that the voter elects candidate 2 when

communication is not successful with candidate 1.

After observing successful communication, the posterior of the voter that he faces a competent

candidate 1 is: µ(m1 = 1, xp1) =qxp1y

p1(C)

qxp1yp1(C)+(1−q)xp1y

p1(NC)

. His expected utility from electing candidate

1 is:

Euv(e = 1, xp1, 0) =qyp1(C)

qyp1(C) + (1− q)yp1(NC)G+

(1− q)yp1(NC)

qyp1(C) + (1− q)yp1(NC)L

He always elects candidate 1 if and only if Euv(1, xp1, 0) > Euv(2, x

p1, 0) = ε or equivalently:

G[qyp1(C)− τ(1− q)yp1(NC)] > (qyp1(C) + (1− q)yp1(NC))ε

We know that ∀G > G, c′v(xp1) > 0. Using the definition of c′v(x

p1), we have: c′v(x

p1) > 0 ⇒

qyp1(C)− τ(1− q)yp1(NC) > 0. Since the right and side is bounded above by ε, ∃ G ≥ G such that

∀G > G, we have: Euv(1, xp1, 0) > Euv(2, x

p1, 0).

Lastly, it is easy to check that the candidates’ strategies are incentive compatible. Candidates

from party 2 do not have any incentive to deviate since xp2 = 0 and by Lemma 1. Candidates from

party 1 do not have incentive to deviate since they get 0 when they choose σ1 = (0, 0) (a candidate

1 is never elected when communication is not successful) and a strictly positive payoff when they

choose σ1(t) = (1, y1(t)).

Consider the following assessment:

• The candidates’ strategies are: Σ1((1, yp1(C)), (1, yp1(NC))), Σ2 = ((0, 0), (0, 0));

• The voter’s strategies are: s(m1 = 1, ∅; (xp1, 0)) = 1, s(m1 = ∅, ∅; (xp1, 0)) = 0, and communi-

cation efforts are: xp = (xp1, 0)

• The communication efforts are defined by the solution to the following system which maxi-

mizes the voter’s expected payoff:

c′v(xp1) = qyp1(C)

(G− ε

2

)− (1− q)yp1(NC)

(τG+

ε

2

)C ′(yp1(t)) = xp1(1− kt), t ∈ {C,NC}

∀G > G, using the results above, we know this assessment is an equilibrium.

43

Proof of Section 5

Lemma 10. In a separating equilibrium, the communication equilibrium strategies satisfy: satis-

fies: yaJ(NC) = 0, J ∈ {0, 1} and

C ′(ya1(C)) =[(1− π)− q

2(1− 2π)ya2x

a2

](1− kC)xa1

C ′(ya2(C)) =[π +

q

2(1− 2π)ya1x

a1

](1− kC)xa2

c′v(xa1) = q(1− q)(1− π)Gya1(C)

c′v(xa2) = q(1− q)πGya2(C)

Proof. yaJ(NC) = 0, J ∈ {0, 1} follows directly from Lemma 1.

Using a similar reasoning as in Lemma 5, we can show that a separating equilibrium cannot exist

if a type NC has no chance of being elected. Therefore, it must be that when communication is

unsuccessful with both candidates, the voter elects party J whenever εJ = ε, J ∈ {1, 2}.

Consider now a competent candidate 1. When she chooses communication effort y1, her expected

utility is:

V1(1, y1;C) = (1− q) (y1x1 + (1− y1x1)π) (1− kC)

+ q(y1x1 ∗ (1− y2x2) +

y1x1 ∗ y2x22

+ (1− y1x1)(1− y2x2)π)

(1− kC)− C(y1)

The main difference with Proposition 2 is that candidate 1 is elected with probability π instead of

1/2 when communication with both candidates is not successful. After rearranging, we get that

candidate 1 maximizes:

maxy1≥0

[(1− π)− q

2(1− 2π)x2y2

](1− kC)x1y1 + π(1− qx2y2)(1− kC)− C(y1)

The first order condition is:

C ′(y∗1) =[(1− π)− q

2(1− 2π)y2x2

](1− kC)x1

Similarly (replacing π by 1− π in the formula above), we get that candidate 2’s optimal commu-

44

nication effort satisfies:

C ′(y∗2) =[π +

q

2(1− 2π)y1x1

](1− kC)x2

Now consider the voter’s maximization problem:

max(x1,x2)∈[0,1]2

q2G+ (1− q)2 ∗ ε+

1︷ ︸︸ ︷(1− q)

2︷︸︸︷q (y2x2 ∗G+ (1− y2x2) ∗ (G(1− π) + πε))

+(1− q)q(πG+ (1− π)ε+ (1− π)y1x1(G− ε))− cv(x1)− cv(x2)

The voter maximizes Vv(x1, x2) with respects to x1 and x2 and we get the following FOC:

c′v(x∗1) = q(1− q)(1− π)(G− ε)y1

c′v(x∗2) = q(1− q)π(G− ε)y2

Taking all together, we get that the solution of the communication subgame (denoted with super-

script a) must satisfy the following system of equation:

C ′(ya1) =[(1− π)− q

2(1− 2π)ya2x

a2

](1− kC)xa1 (7)

C ′(ya2) =[π +

q

2(1− 2π)ya1x

a1

](1− kC)xa2 (8)

c′v(xa1) = q(1− q)(1− π)Gya1 (9)

c′v(xa2) = q(1− q)πGya2 (10)

Lemma 11. ∃π such that π ≥ π, there exists a strictly positive solution to the system of equations

(7)-(10).

Proof. As an intermediary step, we solve the system of equations below taking x2 ∈ (0, 1) and

y2 ∈ (0, 1) as given:

C ′(y1) =[(1− π)− q

2(1− 2π)y2x2

](1− kC)x1

c′v(x1) = q(1− q)(1− π)Gy1

(1 − π) − q2(1 − 2π)y2x2 is decreasing with π. Using the same logic as in Proposition 2, we can

easily see that there exists a unique strictly positive solution since π < 1/2. Let’s denote ya1(x2, y2)

45

and xa1(x2, y2) the solution to this system of equation. We necessarily have (ya1(x2, y2), xa1(x2, y2)) ∈

(0, 1)2, ∀(x2, y2) ∈ [0, 1]2 by assumption on the cost functions. ya1(x2, y2) and xa1(x2, y2) are contin-

uous with x2 and y2 because the solution exists and is unique ∀(x2, y2) ∈ [0, 1]2. We can also show

that ya1(x2, y2) and xa1(x2, y2) decrease with x2 and y2 (we can use the same logic as in Lemma 7).

Now, taking as given x1 ∈ [0, 1] and y1 ∈ [0, 1], consider the system of equations:

C ′(y2) =[π +

q

2(1− 2π)y1x1

](1− kC)x2

c′v(x2) = q(1− q)πGy2

We have that π + q2(1 − 2π)y1x1 is increasing with π. Using the same reasoning as in Proposi-

tion 2, we have that a strictly positive solution to the sytem above exists only if c0C0 < q(1 −

q)π((1− qx1y1)π + q

2y1x1

)G(1−kC). Since y1x1 > 0 (see above), q(1−q)π

((1− qx1y1)π + q

2y1x1

)(G−

ε)(1 − kC) > q(1 − q)π2(G − ε)(1 − kC). Denote π the solution to the equation: c0C0 =

q(1 − q)π2(G − ε)(1 − kC). We have that ∀π ≥ π, there exists a unique positive solution to

the system of equations above (strictly positive when x1 > 0 and y1 > 0). Denote by ya2(x1, y1)

and xa2(x1, y1) this solution. We necessarily have (ya2(x1, y1), xa2(x1, y1)) ∈ [0, 1]2, ∀(x1, y1) ∈ [0, 1]2

by assumption on the cost functions. ya2(x1, y1) and xa2(x1, y1) are continuous with x1 and y1 be-

cause a positive solution exists and is unique, ∀(x1, y1) ∈ [0, 1]2. We also have that ya2(x1, y1) and

xa2(x1, y1) increase with x1 and y1 (we can use the same logic as in Lemma 7).

As a last step, consider the following function:

F (x2, y2) = (xa2(xa1(x2, y2), y

a1(x2, y2)), y

a2(xa1(x2, y2), y

a1(x2, y2)))

Using the results above, it is easy to see that F : [0, 1]2 → [0, 1]2 and F is continuous. By Brouwer’s

Fixed Point Theorem, a fixed point exists.

Note that F (0, 0) >> (0, 0) (both components of F (0, 0) are bigger than 0) so any fixed point is

strictly positive. To see that note that ∀π ≥ π, ya2(0, 0) ≥ 0 and xa2(0, 0) ≥ 0. We know that

both functions increase with x1 and y1. Since we have: xa1(0, 0) > 0 and ya1(0, 0) > 0, we must

have F (0, 0) >> (0, 0). Denote (xa2, ya2) the fixed point which maximizes the voter’s welfare and

46

xa1 = xa1(xa2, y

a2) and ya1 = ya1(xa2, y

a2). By definition of (xa1, x

a2, y

a1 , y

a2), we have:

C ′(ya1) =[(1− π)− q

2(1− 2π)ya2x

a2

](1− kC)xa1

C ′(ya2) =[π +

q

2(1− 2π)ya1x

a1

](1− kC)xa2

c′v(xa1) = q(1− q)(1− π)(G− ε)ya1

c′v(xa2) = q(1− q)π(G− ε)ya2

Therefore, we have found a strictly positive solution to the system of equations (7)-(10).

Lemma 12. Suppose π ≥ π, the communication efforts defined by (7)-(10) have the following

properties:

• xa1 ∗ ya1(C) and xa1 strictly decrease with π

• ∃π ∈ [π, 1/2) such that ∀π ≥ π:

ya1 decreases with π

xa2 and ya2 increase with π

Proof. To reduce the notational burden, denote αaJ = xaJyaJ(C) the probability that communication

with candidate J is successful (J ∈ {1, 2}). Using the implicit function theorem, we have:

C ′′(ya1(C))∂ya1(C)

∂π=− (1− qαa2)(1− kC)xa1 −

q

2(1− 2π)

∂αa2∂π

(1− kC)xa1

+(

(1− π)− q

2(1− 2π)αa2

)(1− kC)

∂xa1∂π

(11)

C ′′(ya2(C))∂ya2(C)

∂π=(1− qαa1)(1− kC)xa2 +

q

2(1− 2π)

∂αa1∂π

(1− kC)xa2

+(π +

q

2(1− 2π)αa1

)(1− kC)

∂xa2∂π

(12)

c′′v(xa1)∂xa1∂π

=− q(1− q)(G− ε)ya1 + q(1− q)(1− π)(G− ε)∂ya1(C)

∂π(13)

c′′v(xa2)∂xa2∂π

=q(1− q)(G− ε)ya2 + q(1− q)π(G− ε)∂ya2(C)

∂π(14)

First we show that ∂αa1/∂π < 0. Suppose not. By (12) and using a similar reasoning as in Lemma

6, we then get ∂ya2/∂π > 0.29 This implies that ∂xa2/∂π > 0 (see (14)) and thus ∂αa2/∂π > 0. But

29We cannot guarantee the existence of a unique fixed point without additional restrictions on the cost functions.However, for any fixed point, we can use a slightly modified version of Lemma 6 since for any x−Jy−J there

47

then we must have (by (11) and Lemma 6) ∂ya1/∂π < 0, ∂xa1/∂π < 0, and thus ∂αa1/∂π < 0. We

have thus reached a contradiction.

To see that xa1 decreases with π, note that a necessary condition for ∂xa1/∂π ≥ 0 is ∂ya1/∂π > 0.

But this implies ∂αa1/∂π > 0 which is impossible.

From (12) and ∂αa1/∂π < 0, it is easy to see that for π close enough to 1/2, we have: ∂ya2/∂π > 0.

Therefore, there must exist ˆπ > 0 such that ∂ya2/∂π ≥ 0, ∀π ≥ π.30 Denote π = max{π, ˆπ} so

that a strictly positive solution to (7)-(10) exists.

When ∂ya2/∂π ≥ 0, we have: ∂xa2/∂π > 0 (from (14). This implies ∂αa2/∂π > 0 and ∂ya1/∂π < 0

from (11)).

Proof of Proposition 7. For π ≥ π, we know that there exists a communication strategy with

strictly positive effort (Lemma 11). From Lemma 12, we know that µ(∅, xa1) =q(1−xa1ya1 )

q(1−xa1ya1 )+(1−q) (by

Bayes’ rule) decreases with π and µ(∅, xa2) increases with π, ∀π ≥ π.

Therefore, there must exist π ∈ [π, 1/2) such that ∀π ≥ π, µ(∅, xa1)G+ ε ≥ µ(∅, xa2)G (a type NC

candidate 1 has a chance to win the election when candidates separate).31

This implies that ∀π ≥ π, we have found equilibrium communication strategies as claimed.

Proof of Corollary 4. From the previous section, we know that xa1 = xa2 when π = 1/2. From

Lemma 12, we know that xa1 is strictly decreasing and xa2 is increasing with π for π ∈ [π, 1/2) (π

is defined in the proof of Lemma 12) which proves the result.

Before proving Proposition 8, we prove the following Lemma.

Lemma 13. We have:

i. ∃π ∈ [π, 1/2) such that xa1 and ya1 decrease with kC ∀π ≥ π

ii. xa2 and ya2 decrease with kC

is a unique yaJ(x−J , y−J) and xaJ(x−J , y−J) (see the proof of Lemma 10). This implies that: C ′′(ya1 )c′′v(xa1) >q(1 − q)(1 − π)G ∗

[(1− π)− q

2 (1− 2π)αa2

](1 − kC). Using the same reasoning as in Lemma 7, we can prove

∂ya2/∂π > 0.30One can easily check that at π = 0, a voter’s communication effort towards candidate 2 is null (see Lemma 10

)).31At π = 1/2, we know that this condition is satisfied by Proposition 2.

48

Proof of Lemma 13. Using (7)-(10) and the Implicit Function Theorem, we get:

C ′′(ya1)∂ya1∂kC

=− q

2(1− 2π)

∂αa2∂kC

(1− kC)xa1 −[(1− π)− q

2(1− 2π)αa2

]xa1

+[(1− π)− q

2(1− 2π)αa2

](1− kC)

∂xa1∂kC

(15)

C ′′(ya2)∂ya2∂kC

=q

2(1− 2π)

∂αa1∂kC

(1− kC)xa2 −[π +

q

2(1− 2π)αa1

]xa1

+[π +

q

2(1− 2π)αa1

](1− kC)

∂xa2∂kC

(16)

c′′v(xa1)∂xa1∂kC

=q(1− q)(1− π)(G− ε) ∂ya1

∂kC(17)

c′′v(xa2)∂xa2∂kC

=q(1− q)π(G− ε) ∂ya2

∂kC(18)

Where, as above, we denote: αaJ = xaJyaJ , J ∈ {1, 2}.

First, it is easy to see that ∂xaJ/∂kC has the same sign as ∂yaJ/∂kC , J ∈ {1, 2}.

Second, we show that ∂αa2/∂kC < 0. Suppose not. By (15) and using a similar reasoning as in

Lemma 6, we then get ∂ya1/∂kC < 0. This implies that ∂αa1/∂kC < 0. But then we must have (by

(16) and Lemma 6) ∂αa2/∂kC < 0. We have thus reached a contradiction.

Since ∂αa2/∂kC < 0, we have ∂ya2/∂kC < 0 and ∂xa2/∂kC < 0.

From (15) and ∂αa2/∂kC < 0, it is easy to see that for π close enough to 1/2, we have: ∂ya1/∂kC < 0.

Therefore, there must exist π such that ∂ya1/∂kC ≤ 0, ∀π ≥ π.

Proof of Proposition 8. The equilibrium communication strategies are defined in Proposition 7.

They exist and satisfy (a modified version of) Lemma 5 since we assume π ≥ π.

We show that the following assessment: σJ(C) = (1, yaJ(C)) and σJ(NC) = (0, 0), J ∈ {1, 2} is

incentive compatible.

We start with a competent candidate 1. The expected utility of a competent candidate 1 when

she chooses p1 = 1 is:

V1(1, ya1(C);C) =

[(1− π)− q

2(1− 2π)xa2y

a2(C)

](1−kC)xa1y

a1(C)+π(1−qxa2ya2(C))(1−kC)−C(ya1(C))

(19)

When a competent candidate 1 deviates and plays the strategy σ1(C) = (0, 0) (no candidate pays

a communication cost when she chooses p = 0, see Lemma 1), she gets after rearranging:

V1(0, 0;C) = π(1− qxa2ya2(C)) (20)

49

We have that a competent candidate 1 does not deviate if and only if: V1(1, ya1(C);C) ≥ V1(0, 0;C).

Using the implicit function theorem and (15), we get that:

d(V1(1, ya1 ;C)− V1(0, 0;C)

dkC= C ′′(ya1)

∂ya1∂kC

ya1 + kC∂αa2∂kC

π − (1− qαa2)π (21)

Where αaJ = xaJyaJ , J ∈ {1, 2} On the right hand-side, we can see that the sign of the first term

is ambiguous, the second term is negative, and the last term is negative. Therefore, we have that

the sign ofd(V1(1,ya1 ;C)−V1(0,0;C)

dkCis ambiguous.

Whend(V1(1,ya1 ;C)−V1(0,0;C)

dkC< 0, using the same reasoning as in Proposition 3 and Lemma 13, we

can show that there exists a unique k1C > 0 such that a competent candidate 1 does not want to

deviate if and only if: kC ≤ k1C .

Suppose nowd(V1(1,ya1 ;C)−V1(0,0;C)

dkC≥ 0. It is easy to check that V (1, ya1 ;C)− V (0, 0;C)|kC=0 > 0.

Therefore, a competent candidate 1 never wants to deviate in this case. Let’s note k1C = 1 in this

case.

We now look at the incentive of a competent right-wing candidate to deviate. The expected

utility of a competent candidate 2 is:

V2(1, ya2 ;C) =

[π +

q

2(1− 2π)xa1y

a1

](1− kC)xa2y

a2 + (1− π)(1− qxa1ya1)(1− kC)− C(ya2) (22)

If she deviates and plays σ = (0, 0), she gets:

V2(0, 0;C) = (1− π)(1− qxa1ya1) (23)

We get that a competent candidate 2 does not deviate if and only: V2(1, ya2 ;C)) ≥ V2(0, 0;C).

Taking the derivative of the differences between the two expected utility and after rearranging, we

get:d(V2(1, y

a2 ;C)− V2(0, 0;C)

dkC= C ′′(ya2)

∂ya2∂kC

ya2 + kC∂αa1∂kC

(1− π)− (1− qαa1)(1− π) (24)

We can see that the sign of this derivative is ambiguous. Ifd(V2(1,ya2 ;C)−V2(0,0;C)

dkC< 0, then there

exists a unique k2C such that a competent candidate 2 does not want to deviate if and only if:

kC ≤ k2C . Ifd(V2(1,ya2 ;C)−V2(0,0;C)

dkC≥ 0, we get that a competent candidate 2 does not want to deviate

for all kC . We then note k2C = 1.

50

Putting the results above together, we can see that a competent candidate does not want to

deviate if and only if: kC ≤ kaC ≡ min{k1C , k2C}.

We now look at the incentive to deviate of a non competent candidate 1. When she plays (0, 0),

she gets:

V1(0, 0;NC) = π(1− qxa2ya2) (25)

When she chooses to campaign on p1 = 1, she makes communication effort yNC1 defined above.

She then gets in expectation:

V1(1, yNC1 ;NC) =

[(1− π)− q

2(1− 2π)xa2y

a2

](1− kNC)xa1y

NC1 + π(1− qxa2ya2)(1− kNC)− C(yNC1 )

(26)

We can see that (25) does not depend on kNC . Using the implicit function theorem, we have that:

dV1(1, yNC ;NC)

dkNC= − [(1− π)− q(1− 2Π1)x

a2y

a2 ]xa1y

NC − π(1− qxa2ya2) < 0

Therefore, using the same reasoning as in Proposition 3, we can see that there exists a unique k1NC

such that a non competent candidate 1 does not want to deviate if and only if kNC ≥ k1NC .

Using the same steps as above, we can find that there exists a unique k2NC such that a non

competent candidate 2 does not want to deviate if and only if: kNC ≥ k2NC . Putting these re-

sults together, we find that a non competent candidate does not want to deviate if and only if:

kNC ≥ kaNC ≡ max{k1NC , k2NC}.

We thus have that the separating assessment described above is incentive compatible, and thus

a PBE if and only if (C3) and (C4) are satisfied.

Proof of Corollary 5. The expected utility of the voter is:

Vv(xa1, x

a2) = q2G+ (1− q)q(πya2xa2(G− ε) + (1− π)(G+ ε)) + (1− q)q(π(G+ ε) + (1− π)ya1x

a1(G− ε))

+ (1− q)2ε− cv(xa1)− cv(xa2)

51

Taking the derivative with respect to π and using the Envelope theorem, we get:

dVv(xa1, x

a2)

dπ= (1− q)q(G− ε)

[ya2x

a2 − ya1xa1 + (1− π)

∂ya1∂π

xa1 + π∂ya2∂π

xa2

]

At π = 1/2, we have: ya2 = ya1 = yC and xa2 = xa1 = xv (see Proposition 2). So we have:

dVv(xa1, x

a2)

dπ

∣∣∣∣π=1/2

=(1− q)qGxv

2

[∂ya1∂π

∣∣∣∣π=1/2

+∂ya2∂π

∣∣∣∣π=1/2

]

But from (11) and (12), we can see that at π = 1/2, we have:∂ya1∂π

= −∂ya2∂π

. Therefore, we have

dVv(xa1 ,xa2)

dπ

∣∣∣π=1/2

= 0 as claimed.

Proof of Proposition 9. By Lemma 11, we know that a necessary condition of the existence of a

strictly positive solution to the system of equations (7)-(10) is:

C0c0 < q(1− q)π(

(1− qya1xa1)π +q

2ya1x

a1

)(G− ε)(1− kC)

By Lemma 12, we have that the right hand side is decreasing with π. So ∃! π solving: C0c0 = q(1−

q)π((1− qya1xa1)π + q

2ya1x

a1

)(G−ε)(1−kC). ∀π ≤ π, we have: C0c0 ≥ q(1−q)π

((1− qya1xa1)π + q

2ya1x

a1

)(G−

ε)(1− kC).

By Assumption 3.i (strict convexity), π > 0. By Proposition 2, π < 1/2.

From Lemma 1, we know that a candidate chooses p = 1 if and only if she exerts communication

effort. From Lemma ??, we can see that xa2 = 0 = ya2 whenever π ≤ π. Since we assume that ε is

small enough, there is no equilibrium when candidates from one party separate whereas candidates

from the other party pool on their party’s owned issue. We have that candidates from both parties

pool on their party’s respective owned issue or competent and non-competent candidates from (at

least) one party commit to the reform ∀π ≤ π.32

32Note that π > π is only one of the necessary conditions for the existence of a separating equilibrium. It is notby no mean sufficient. There may exist π > π such that a separating equilibrium does not exist ∀π ≤ π.

52

Appendix B (web appendix): Optimality of a separating

equilibrium

In all what follows, we suppose that candidates are ex-ante identical. We show that ∃kNC ∈ (0, 1)

such that a separating equilibrium (competent candidates campaign on issue I, non competent

ones promise to uphold the status quo) maximizes the voter’s expected welfare ∀kNC ≤ kNC .

In what follows, we use the following notation. Denote αC = yCxv the probability that candidate

J’s campaign is successful (voter observes pJ) in a separating equilibrium. We also denote the

expected utility of the voter in a separating assessment by:

Vv(sep, sep) =q2G+ q(1− q)(G+ ε+ αC(G− ε))− 2cv(xv)

=qG+ q(1− q)αC(G− ε) + (1− q)ε− 2cv(xv) (B.1)

Note also that, from Proposition 2, we have: q(1−q)αC(G−ε)/2 > cv(xv) since the voter maximizes

his expected utility at the communication subgame and xv > 0 (by assumption cv(0) = 0).

We thus have:

Vv(sep, sep) > qG+ (1− q)ε (B.2)

It is easy to check that the voter is better off in a separating equilibrium than in a pooling

equilibrium (which always exists) when candidates’ strategy is σ = (0, 0) (competent and non

competent types choose p = 0).

We also know from Proposition 1 that there is no equilibrium when only one candidate separates

when ε is low enough. Assuming such an equilibrium exists, the voter’s expected payoff is:

Vv(sep, 0) = q(α1sepG+ (1− αsep1 )ε) + (1− q)ε

Vv(sep, 0) = ε+ qαsep1 (G− ε) < qG+ (1− q)ε

With αsep1 the probability that communication is successful with candidate 1 in such an equilib-

rium.

By B.2, we see that the voter is better off in an equilibrium when both candidates separate.

We now show that the voter gets a higher expected payoff in a separating equilibrium than in

53

an assessment when candidate 1 pools on p = 1 and candidate 2 pools on p = 0.

I denote by x11 the communication effort of the voter towards candidate 1 when candidate 1 pools

on issue 1. I denote by αC1 and αNC1 the probability that communication is successful with a

competent candidate 1 and non competent candidate 1, respectively, when they pool on p = 1.

A necessary condition for such an assessment to be an equilibrium is that the voter elects candidate

1 when communication is successful and elects candidate 2 when it is not successful. The expected

utility of the voter is then:

Vv(1, 0) = qαC1 (G− ε) + (1− q)αNC1 (L− ε) + ε− cv(x11)

Since αC1 < 1, we have:

Vv(1, 0) < q(G− ε) + (1− q)αNC1 (L− ε) + ε− cv(x11) < qG+ (1− q)ε

From (B.2), it must be that the voter is better off in a separating equilibrium.

We now show that a separating equilibrium gives a higher payoff to the voter than an assessment

when both candidates pool on p = 1. The voter elects candidate J if communication with J is

successful and not successful with her opponent. The voter flips a fair coin when communication

with both candidates is successful and not successful.

I denote by x11 and x12 the communication effort of the voter towards candidate 1 and 2 respectively.

I also denote by αtJ the probability that communication is successful with a type t (t ∈ {C,NC})

candidate J (J ∈ {1, 2}). We can show that the optimal level of communication for the voter is

such that: x11 = x12 which implies αt1 = αt2, t ∈ {C,NC}.33

Imposing the symmetry, the expected utility of the voter is then:

Vv(1, 1) = q2G+ (1− q)2L+ 2q(1− q)(αC1 (1− αNC1 )G+ αC1 α

NC1

G+ L

2

+(1− αC1 )(1− αNC1 )G+ L

2+ (1− αC1 )αNC1 L

)− 2cv(x

11)

= q2G+ (1− q)2L+ q(1− q)((1 + αC1 − αNC1 )G+ (1− αC1 + αNC1 )L)− 2cv(x11)

33The reasoning is the same as in Proposition 2. Note however that the optimal level of communication may notbe the highest solution to the system of equation that defines xtJ and the candidate J’s level of communication.

54

Using Assumption 1, we have:

Vv(1, 1) < q2G+ q(1− q)((αC1 − αNC1 )G+ (1− αC1 + αNC1 )L)− 2cv(x11)

So we have:

Vv(sep, sep)− Vv(1, 1) > q(1− q)(G− L)(1− αC1 + αNC1 ) + 2cv(x11)

+ q(1− q)(G− ε)αC(sep) + (1− q)ε− 2cv(xv)

> 0

The last inequality follows from (B.2).

Lastly, we show that a separating equilibrium gives the voter a higher expected payoff than an

assessment when candidate 1 pools on p = 1 and candidate 2 separates for kNC ≤ kNC . We denote

by x11 and xsep2 the communication effort of the voter towards candidate 1 and 2 respectively. I

also denote by αt1 the probability that communication is successful with a type t (t ∈ {C,NC})

candidate J (J ∈ {1, 2}). Note that we have αNC2 = 0 by Lemma 1.

The voter elects candidate 1 only if communication with candidate 1 is successful and commu-

nication with candidate 2 is not successful. The expected utility of the voter after rearranging

is:

Vv(1, sep) =q2G+ q(1− q)(

(G+ ε) + αC1 (G− ε)− ε

2(1− αC1 ) + (L−G)αNC1 (1− αC2 )

)+ (1− q)2

(ε+ αNC1 (L− ε)− ε

2(1− αNC1 )

)− cv(x11)− cv(x

sep2 )

Using the same reasoning as in Proposition 2 and Lemma 7, we can show that a non competent

candidate 1’s communication effort (y1(NC)) decreases with kNC and a competent candidate 1’s

communication effort and the voter’s effort towards candidate 1 increases with kNC .

We also have:

Vv(sep, sep) < q2G+ q(1− q)(yC(x11 + xsep2 )

2(G− ε) + (G+ ε)

)+ (1− q)2ε− cv(x11)− cv(x

sep2 )

by definition of xv (it is easy to check that x11 = xsep2 for (at most) a measure 0 set of parameter

55

values so the inequality is strict).

Therefore, we have:

Vv(sep, sep)− Vv(1, sep) >

q(1− q)(yC x

11+x

sep2

2− x11yC1 )(G− ε)

+q(1− q)( ε2(1− αC1 ) + (G− L)αNC1 (1− αC2 ))

+(1− q)2(αNC1 (ε− L) + ε2(1− αNC1 )

>q(1− q)x11(

yC

2+ yNC1 − yC1 )(G− ε)

The second inequality follows from Assumption 1, the fact that a necessary condition for an

asymmetric equilibrium to exist is xsep2 > 0, and the terms omitted are strictly positive.

Given that yC > 0 and does not depend on kNC (see Proposition 2), yNC1 → yC1 as kNC → kC ,

there exists: kNC > kC such that q(1 − q)x11(yC

2+ yNC1 − yC1 )(G − ε) ≥ 0 ⇔ kNC ≤ kNC . This

implies that ∃kNC > kNC such that Vv(sep, sep) ≥ Vv(1, sep), ∀kNC ≤ kNC .34

34Note that here we assume that the asymmetric equilibrium exists ∀kNC > kNC . This is not guaranteed.However, this simply implies that the upper bound on kNC is less tight than suggested in the analysis.

56

References

- Alesina, Alberto and Allan Drazen. 1991. “Why are Stabilizations Delayed?” American

Economic Review, 81(5): 1170-1188.

- Aldrich, John H. 1995. Why Parties? The Origin and Transformation of Political Parties

in America. Chicago: University of Chicago Press.

- Aragons, Enriqueta, Micael Castanheira, and Marco Giani. 2012. “Electoral competition

through issue selection.” Working Paper;

- Ashworth, Scott. 2006. “Campaign finance and voter welfare with entrenched incumbents”,

American Political Science Review 100 (01): 55-68;

- Ashworth, Scott, and Ethan Bueno de Mesquita. 2006. “Delivering the Goods: Legislative

Particularism in Different Electoral and Institutional Settings.” Journal of Politics 68 (1):

168-179;

- Ashworth, Scott, and Ethan Bueno De Mesquita. 2008. “Electoral selection, strategic chal-

lenger entry, and the incumbency advantage.” Journal of Politics 70 (4): 1006-1025;

- Asp, Kent and Peter Esaiasson. 1996. “The Modernization of Swedish Campaigns: Individu-

alization, Professionalization, and Mediatization” in Politics, Media, and Modern Democracy

eds David L. Swanson and Paolo Mancini. Westport, CT and London: Praeger;

- Banks, Jeffrey S., and Rangarajan K. Sundaram. 1998. “Optimal retention in agency prob-

lems.” Journal of Economic Theory 82 (2): 293-323;

- Benhabib, Jess and Aldo Rustichini. 1996. “Social Conflict and Growth.” Journal of Eco-

nomic Growth, 1(1): 125-142.

- Besley, Timothy. 2006. Principled Agents? Oxford: Oxford University Press;

- Blumenthal, Mark M. 2011. “Response to Stephen C. Craig and Michael D. Martinez’s Voter

Competence” in The Electoral Challenge, 2nd Edition eds Stephen C. Craig and David B.

Hill. Washington, D.C.: CQ Press;

57

- Bowen, T. Renee and Cecilia Hyunjung Mo. 2012. “The Voter’s Blunt Tool.” Stanford

University - Research Paper No. 2115;

- Bresser Pereira, Luiz Carlos. 1994. “Brazil” in in The Political Economy of Policy Reform

John Williamson editor. Washington, D.C.: Institute for International Economics;

- Brians, Craig Leonard and Martin P. Wattenberg. 1996. “Campaign Issue Knowledge and

Salience: Comparing Reception from TV Commercials, TV News and Newspapers.” Ameri-

can Journal of Political Science, 40 (1): 172-193;

- Bull, Jesse, and Joel Watson. 2004. “Evidence disclosure and verifiability.” Journal of

Economic Theory 118 (1): 1-31;

- Bull, Jesse, and Joel Watson. 2007. “Hard evidence and mechanism design.” Games and

Economic Behavior 58 (1): 75-93;

- Canes-Wrone, Brandice, Michael C. Herron, and Kenneth W. Shotts. 2001. “Leadership

and pandering: A theory of executive policymaking.” American Journal of Political Science:

532-550;

- Coate, Stephen. 2004a. ”Pareto-improving campaign finance policy.” American Economic

Review: 628-655;

- Coate, Stephen. 2004b. ”Political Competition with Campaign Contributions and Informa-

tive Advertising.” Journal of the European Economic Association: 772-804;

- Cox, Gary W. and Mathew D. McCubbins. 1993. Legislative Leviathan. Berkeley: University

of California Press.

- Crawford, Vincent P., and Joel Sobel. 1982. “Strategic information transmission.” Econo-

metrica: 1431-1451;

- Cuckierman, Alex and Mariano Tommasi. 1998. “When Does it Take a Nixon to Go to

China.” American Economic Review, 88(1): 180-197.

- Dewatripont, Matthias and Jean Tirole. 2005. “Modes of Communication.” Journal of

Political Economy, 113 (6): 1217-1238;

58

- Downs, Anthony. 1957. An Economic Theory of Democracy. New York: Harper and Row.

- Drazen, Allan. 2000. Political economy in macroeconomics. Princeton: Princeton University

Press

- Drazen, Allan and Vittorio Grilli. 1993. “The Benefit of Crises for Economic Reforms.”

American Economic Review, 83(3): 598-607.

- Drazen, Allan and William Easterly. 2001. “Do Crises Induce Reform? Simple Empirical

Tests of Conventional Wisdom.” Economics and Politics, 13(2): 129-157.

- Elliott, Euel W. 1989. Issues and Elections. Boulder, CO: Westview Press;

- Fernandez, Raquel and Dani Rodrik. 1991. “Resistance to Reform: Status Quo Bias in the

Presence of Individual-Specific Uncertainty.” American Economic Review, 81(5): 1146-1155.

- Franz, Michael M. 2011. “Political Advertising” in The Electoral Challenge, 2nd Edition eds

Stephen C. Craig and David B. Hill. Washington, D.C.: CQ Press;

- Freedman, Paul, Michael Franz, and Kenneth Goldstein. 2004. “Campaign Advertising and

Democratic Citizenship.” American Journal of Political Science, 48 (4): 723741;

- Gidengil, Elisabeth, Andre Blais, Neil Nevitte, and Richard Nadeau. 2002. “Priming and

campaign context: evidence from recent Canadian elections.” in Do Political Campaigns

Matter? eds David M. Farrell and Rudiger Schmitt-Beck. London and New York: Routledge;

- Grossman, Sanford J. 1981. “The informational role of warranties and private disclosure

about product quality.” Journal of law and economics 24 (3): 461-483;

- Grossman, Gene M., and Elhanan Helpman. 1996. ”Electoral competition and special

interest politics.” The Review of Economic Studies 63 (2): 265-286;

- Holbrook, Thomas M. 2011. “Do Campaigns Really Matter?” in The Electoral Challenge,

2nd Edition eds Stephen C. Craig and David B. Hill. Washington, D.C.: CQ Press;

- Hollilan, Thomas A. 2011. “Campaigns and the News Media” in The Electoral Challenge,

2nd Edition eds Stephen C. Craig and David B. Hill. Washington, D.C.: CQ Press;

59

- Hsieh, Chang-Tai. 2000. “Bargaining over reform.” European Economic Review, 44: 1659-

1676.

- Joslyn, Mark R. and Steve Ceccoli. 1996. “Attentiveness to Television News and Opinion

Change in the Fall 1992 Presidential Campaign.” Political Behavior 18 (2): 141-170;

- Kiewiet, D. Roderick and Mathew D. McCubbins. 1991. The Logic of Delegation. Chicago:

University of Chicago Press.

- Krueger, Anne O. 1992. Economic Policy Reform in Developing Countries. Oxford: Basil

Blackwell;

- Laban, Raul and Federico Sturzenegger. 1994a. “Fiscal conservatism as a response to the

debt crisis.” Journal of Development, 45: 305-324.

- Laban, Raul and Federico Sturzenegger. 1994b. “Distributional Conflict, Financial Adapta-

tion, and Delayed Stabilizations.” Economics and Politics, 6(3): 257-276.

- McAllister, Ian. 2002. “Calculating or capricious? The new politics of late deciding voters,”

in Do Political Campaigns Matter? eds David M. Farrell and Rudiger Schmitt-Beck. London

and New York: Routledge;

- Milgrom, Paul R. 1981. “Good news and bad news: Representation theorems and applica-

tions.” The Bell Journal of Economics: 380-391.

- Mondino, Guillermo, Federico Sturzenegger and Mariano Tommasi. 1996. “Recurrent High

Inflation and Stabilization: A Dynamic Game.” International Economic Review, 37(4): 981-

996.

- Morelli, Massimo and Richard Van Weelden. 2012. “Re-election Through Division.” mimeo

- Murphy, Mike. 2011. “Response to Michael M. Franz’s Political Advertising” in The Electoral

Challenge, 2nd Edition eds Stephen C. Craig and David B. Hill. Washington, D.C.: CQ

Press;

- Naım, Moises. 1993. Paper Tigers and Minotaurs: The Policy of Venezuela’s Economic

Reforms. Washington, DC: Carnegie Endowment;

60

- Norris, Pippa. 2002. “Do campaign communications matter for civic engagement?” in Do

Political Campaigns Matter? eds David M. Farrell and Rudiger Schmitt-Beck. London and

New York: Routledge;

- Nimmo, Dan. 1996. “Politics, Media, and Modern Democracy: The United States.” in

Politics, Media, and Modern Democracy eds David L. Swanson and Paolo Mancini. Westport,

CT and London: Praeger;

- Olson, Mancur. 1982. The rise and decline of nations: economic growth, stagflation, and

social rigidities. New Haven: Yale University Press.

- Persson, Petra. 2011. “Attention Manipulation and Information Overload.” Working Paper;

- Petrocik, John R. 1996. “Issue Ownership in Presidential Elections: with a 1980 Case Study.”

American Journal of Political Science, 40(3): 825-850.

- Petrocik, John R., William L. Benoit, and Glenn J. Hansen. 2003. “Issue Ownership and

Presidential Campaigning, 1952-2000.” Political Science Quarterly, 118(4): 599-626.

- Popkin, Samuel L. 1991. The Reasoning Voter. Chicago, IL: The University of Chicago

Press;

- Prat, Andrea. 2002. ”Campaign advertising and voter welfare.” The Review of Economic

Studies 69 (4): 999-1017;

- Prato, Carlo and Stephane Wolton. 2013. “Incredibly Loud, Extremely Close. The Impact

of Costly Campaigns and Independent Expenditure on Electoral Competition.” mimeo;

- Rodrik, Dani. 1989. “Promises, Promises: Credible Policy Reform via Signalling.” The

Economic Journal, 99: 756-772;

- Salmore, Barbara G. and Stephen A. Salmore. 1989. Candidates, Parties, and Campaigns,

2nd Edition. Washington, D.C.: CQ Press;

- Snyder Jr., James M. and Michael M. Ting. 2002. “An Informational Rationale for Political

Parties.” American Journal of Political Science, 46(1): 90-110.

61

- Sturzenegger, Federico and Mariano Tommasi. 1998. “Introduction to The Political Econ-

omy of Reform” in The Political Economy of Reform eds. Federico Sturzenegger and Mariano

Tommasi. Cambridge, MA: The MIT Press;

- Velasco, Andres. 1999. “A Model of Endogenous Fiscal Deficits and Delayed Fiscal Reforms”

in Fiscal Institution and Fiscal Performance, ed. James M. Poterba. Chicago: Chicago

University Press.

- Williamson, John. 1994. “Panel Discussion on the Political Economy of Policy Reform”

in The Political Economy of Policy Reform John Williamson editor. Washington, D.C.:

Institute for International Economics;

- Wittman, Donald. 2007. ”Candidate quality, pressure group endorsements and the nature

of political advertising.” European Journal of Political Economy 23 (2): 360-378;

62