To Fight or to Govern? Political Capital and Electoral Competition

• In Event: Political Competition and Conflict

Abstract

The democratic ideal of voters’ sovereignty over policy choice through the electoral process is subject to agency problems that may befuddle even well-established democracies. However, the commonly accepted view of such problems is that the electoral contest is the primary constraint on policy-making by the incumbents. However, this view assumes away a key ingredient of policy-making that "the private power" of candidates (or parties) that influences how an even whether the policy choices turn into policy outcomes. In this model, we develop an accountability model, in which two political rivals may setup political constraints to each other’s policy decisions. This model provides a theory of how the effects of private power may influence the electoral accountability and generates some interesting conclusions that help account for a number of otherwise puzzling empirical observations.

There are three players in the game, an incumbent, a challenger and a representative voter. At the beginning of the game, the incumbent and the challenger may choose to use their endowed political capitals to setup political constraints to their rivals. Then the incumbent provides the public goods to the voter, but subject to the political constraints. After that the voter decides whether to keep the incumbent in the office by an election. The winner of the election may provide the public good again subject to the political constraint.

We show that anticipation of voter’s responsiveness to parties’ political capital investments discourages them from adopting political constraint. However, parties are more likely to invest into such constraint when the uncertainty over parties’ candidates’ competences is high, and when private (ideological) goods are very valuable. Being in office skews the office-holder’s preference toward governance-enhancing political capital, while the opposition’s status pushes it toward the opposition-enhancing technologies. This reinforces the parties’ prior status with respect to office-holding in the upcoming elections, pointing to a kind of path dependence in political capital specialization and office-holding that suggests a rationale for incumbency advantage that has not been previously identified in the literature.

Finally, we find that the possibility that political capital affects policy-making improves voter welfare when parties’ valuations of private goods are sufficiently high and potential constraints on the incumbent can be very effective; but parties’ investments into political capital may be detrimental to voter welfare when private-goods valuations are somewhat lower and the potential constraints created by opposition-enhancing political capital are relatively low.

Authors

• Congyi Zhou, New York University

• Catherine Hafer, New York University

• Scott Tyson, University of Rochester