Three Projects in Economic Theory: Models of Interdependent Preferences and of Candidate Competition

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This research consists of three projects - all joint with Faruk Gul of Princeton University: (1) Interdependent Preferences; (2) Candidate Competition and Voter Ignorance; and (3) Modeling Political Campaigns. Evidence from experiments points to the importance of social factors in economic decision making. Decision-makers seem to be influenced by the attitudes, intentions or personalities of others in a way that standard models cannot account for. The first part of the research will develop a model of interdependent preferences to capture phenomena such as altruism, reciprocity or a desire to conform. The broader impact of this research will be a more descriptive model of social interactions.The second project analyzes a model of political competition. The standard Downsian model predicts that candidates take median-preferred policy positions. Evidence from elections in the US and other countries is often in conflict with this prediction. The project will examine a Downsian model under the assumption that some voters are uninformed of the policy choices. Research to date analyzes a simple model where one candidate is committed to a fixed (median preferred) policy while the other candidate must choose between the median preferred policy and a partisan policy. Voters prefer the moderate to the partisan policy but have a personality preference for one of the candidates when both candidates choose the moderate policy. The broader impact is to (i) provide a model of candidate competition that better matches the evidence; (ii) understand the effectiveness of democratic institutions in aggregating information and in enforcing the median preferred outcome.The final project will develop and analyze a new model of political competition to study the effect of differential resources of candidates. The research will analyze a dynamic model of strategic experimentation in which candidates generate information that allows the median voter to learn the payoff associated with the proposed policies. This research will address the following questions: (1) What is the effect of having more resources on the chances of getting elected? (2) Can voters benefit from regulations that limit campaign spending? (3) What is the effect of resources on policy selection? (4) How do advocacy groups affect policy outcomes? The broader impact of this research is a better understanding of the effect of candidate resources on policy outcomes.