Parties with Policy Preferences and Uncertainty Over Voter Behavior

The equilibrium redistributive policy proposals of two parties with policy preferences is studied. Each party’s ideal policy coincides with that of citizens having a particular income level, and the party’s utility function reflects its attitude to the trade-off between choice of preferred policy and likelihood of victory. When parties face uncertainty about citizens’ abstention from voting, divergent equilibrium proposals are derived which are more moderate than their contrasting ideal policies. Political equilibria under different prior beliefs on abstention are then compared. It is shown that a lower likelihood of abstention in a particular income group induces both parties to make proposals catering to that group, in equilibrium. ∗The author thanks Toshihiro Ihori, Hideki Konishi, Joong-Ho Kook, Yukihiro Nishimura, Junichiro Wada, Naoyuki Yoshino, two anonymous referees, and seminar participants at the Institute of Statistical Research, the Annual Meeting of the Japanese Economic Association, and the University of Tokyo, for their insightful comments. In particular, the author is indebted to Hideki Konishi for his invaluable comments on vote share function in an earlier version, used in the derivation of (8). Financial support from Hosei University is gratefully acknowledged. †Correspondence to: Kimiko Terai, Faculty of Business Administration, Hosei University, 217-1 Fujimi, Chiyoda-ku, Tokyo, 102-8160 Japan. E-mail: [email protected]