Strategic political resource allocation

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Mastronardi, Nick

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Economics is the study of the allocation of resources. Since Arrow's Fundamental Welfare Theorems, we know that competitive-markets achieve Pareto allocations when governments correct market failures. Thus, it has largely been the mission of economists to serve as 'Market Engineers': To identify and quantify market failures so the government can implement Pareto-improving policy (make everyone better without making anyone worse). Do Pareto- improving policies get implemented? How does policy become implemented? Achieving a Pareto efficient allocation of a nation's resources requires studying the implementation of policy, and therefore studying the allocation of political resources that influence policy. Policy implementation begins with the electoral process. In this dissertation, I use auction analysis, econometrics, and game theory to study political resource allocations in the electoral process. This dissertation consists of three research papers: Finance-Augmented Median-Voter Model, Vote Empirics, and Colonel Blotto Strategies. The Finance-Augmented Median-Voter Model postulates that candidates' campaign expenditures are bids in a first-price asymmetric all-pay auction in order to explain campaign expenditure behavior. Vote Empirics empirically analyzes the impacts of campaign expenditures, incumbency status, and district voter registration statistics on observed vote-share results from the 2004 congressional election. Colonel Blotto Strategies postulates that parties' campaign allocations across congressional districts may be a version of the classic Col Blotto game from Game Theory. While some equilibrium strategies and equilibrium payoffs have been identified, this paper completely characterizes players' optimal strategies. In total, this dissertation solves candidates' optimal campaign expenditure strategies when campaign expenditures are bids in an all-pay auction. The analysis demonstrates the need for understanding exactly the impacts of various factors, including strategic expenditures, on final vote results. The research uses econometric techniques to identify the effects. Last, the research derives the complete characterization of Col Blotto strategies. Discussed extensions provide testable predictions for cross-district Party contributions. I present this research not as a final statement to the literature, but in hopes that future research will continue its explanation of political resource allocation. An even greater hope is that in time this literature will be used to identify optimal "policy-influencing policies"; constitutional election policies that provide for the implementation of Pareto-improving government policies.




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