Research

Abstract: Electoral contests are often marked by abrupt discontinuities in candidate payoffs, especially when losing entails substantial personal, financial, or legal costs. In this paper, we develop a formal model of electoral competition in which candidates’ payoffs incorporate loss aversion, thereby capturing the high stakes of electoral defeat. Our framework generalizes the standard winning probability and allows for flexible loss functions, reflecting a variety of institutional risks, campaign financing constraints, and legal exposures. We derive sufficient conditions for the existence of Nash equilibria in both pure and mixed strategies, with a particular focus on how asymmetries in loss penalties shape candidates’ strategic positioning. Notably, when candidates face steeply divergent costs upon losing, pure strategy equilibria may fail to exist, leading to potential increases in policy divergence and electoral volatility. The model thus offers novel theoretical insights into the interplay between electoral stakes and candidate behavior, contributing to our understanding of political competition and policy formation.

JEL Codes: C72, D72, D81.

Keywords: Electoral competition, discontinuous payoffs, loss aversion, Nash equilibrium, strategic positioning.

Abstract: We study the strategic interaction between policy positioning and hostile rhetoric in elections. Hostility is modeled as a zero-sum, affective, and non-informative weapon to attack opponents. Our main contribution is a \textit{strategic substitution} mechanism: Candidates may moderate or radicalize positions, not for ideological reasons, but to manage rhetorical conflict costs, which intensify as platforms converge. This mechanism generates three politically relevant equilibria—centrist-biased, identity-aligned, and extreme-biased—from a parsimonious set of primitives. Lower rhetorical costs or higher affective leverage expand the scope for radicalization, while tighter constraints encourage moderation. Paradoxically, cheaper hostility produces worse social outcomes. The framework unifies positioning and affective polarization under one roof and delivers sharp and testable predictions for modern electoral dynamics..

JEL Codes: D70; D72; C72.

Keywords: Electoral competition; strategic hostility; policy–rhetoric trade-off; affective polarization; ideological positioning; radicalization

Abstract: We develop and test a model of fiscal accountability in which parties compete over an integrated fiscal platform of taxes, public goods, and political rents. The theory predicts that institutional features such as disproportional electoral rules discipline politicians by raising the electoral stakes, yielding in equilibrium higher provision of public goods, lower corruption, and lower taxes. We test these predictions in a laboratory experiment that models both sides of the electoral game: human subjects act as candidates as well as voters, generating a rich dataset on fiscal policy choice and voting behavior. The results provide causal evidence for the disciplining effect of disproportional rules, which significantly reduce corruption and increase public good provision. Yet two behavioral frictions attenuate this mechanism. A partisan shield allows voters to tolerate high corruption from aligned candidates, while candidates learn a public–good gambit, offsetting rent extraction with additional public spending funded by higher taxes. Our findings show that while electoral rules are a powerful source of discipline, their effectiveness is constrained by the psychological trade-offs voters are willing to accept..

JEL Codes: C90, D72, D73.

Keywords: Electoral Accountability; Fiscal Policy; Corruption; Electoral Systems; Voter Psychology; Partisan Bias.

Abstract: Social information—organically generated content about past purchases—can strongly influence consumer choices in online platforms. Yet such information may compete with paid advertising, the main revenue source for social networks. We present a model in which two competing firms advertise on a social network while consumers decide which products to sample. Some consumers observe social information about earlier purchases. We characterize when the platform allows social information to flow freely and when it suppresses it. The key factor is consumers’ \emph{effective response} to advertising, i.e., how readily they sample an advertised product and how many times they search before buying. If social information enhances advertising’s impact, the platform diffuses it; otherwise, it restricts it. We show that suppressing social information reduces both consumer welfare and the likelihood of discovering higher‐quality products. Our findings remain robust if consumers can opt out of the market entirely when first‐search costs are high.

JEL Classification Codes: L00, L80, M37.

Key Words: Social networks; Social information; Advertising; Consumer search.

• Slides from the  Athens EARIE 2018 Conference (old version of the paper).

• A previous version circulated under the title "Social Information Management" (September 10, 2018). Available at SSRN: http://dx.doi.org/10.2139/ssrn.3246956.

Abstract: Despite the empirical support for other-regarding behaviour in humans, spatial voting theory has largely overlooked the role of social preferences. This work takes the perspective that individuals not only harbour selfish preferences regarding material possessions, but also experience emotions such as envy and guilt regarding the possessions of others. By exploring how these emotions, manifested as inequity aversion, shape collective decision-making, this research deviates from the predominant focus on self-interest. Instead, it delves into the influence of guilt and envy on distributive politics, proposing two sensible constraints on these emotions, called limited and chained other-regardingness. These domain conditions on social preferences are aligned with the empirical estimates of inequity aversion; and they aim to ensure the stability (non-emptiness), uniqueness, and fairness of the majority-rule core.

JEL Classification Codes: D70, D71, D91.

Key Words: Inequity Aversion; Majority Rule; Core; Egalitarianism; Other-Regard.

Presentation Slides: PET 2024, Lyon & SCW 2024, Paris

Earlier draft available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4811942, April 2024 

Abstract (en español): A pesar del apoyo empírico para el comportamiento considerado hacia los demás en los humanos, la teoría del voto espacial ha pasado por alto en gran medida el papel de las preferencias sociales. Este trabajo adopta la perspectiva de que los individuos no solo albergan preferencias egoístas con respecto a las posesiones materiales, sino que también experimentan emociones como la envidia y la culpa con respecto a las posesiones de los demás. Al explorar cómo estas emociones, manifestadas como aversión a la inequidad, dan forma a la toma de decisiones colectiva, esta investigación se desvía del enfoque predominante en el interés propio. En cambio, se adentra en la influencia de la culpa y la envidia en la política distributiva, proponiendo dos restricciones sensatas sobre estas emociones, llamadas consideración limitada y encadenada hacia los demás. Estas condiciones de dominio sobre las preferencias sociales están alineadas con las estimaciones empíricas de la aversión a la inequidad; y su objetivo es garantizar la estabilidad (no vacuidad), la singularidad y la equidad del núcleo de la regla de la mayoría.

Abstract: We analyse a political competition model of redistributive policies. We provide an equilibrium existence result and a full characterization of the net transfers to the different income groups. We also derive several testable predictions about the way in which the net group transfers and the after-tax Gini coefficient vary with the main parameters of the model. In accordance with the theory, the empirical evidence from a sample of developed and developing democracies supports a highly statistically significant association between: (i) the net group transfer and the gap between the population and the group mean initial income, and (ii) the net group transfer (and resp., the Gini coefficient) and power sharing disproportionality. In addition, the data also provide some empirical evidence confirming a significant relationship between the net transfers to the poor (and resp., the Gini) and the concern of the political parties with income inequality.

JEL Classification Codes: C72, D72, D78.

Key Words: Redistribution; Inequality Concern; Partisanship; Electoral Rules; Power Sharing; Income Inequality.

• Supplementary material available in the Online  Appendix

• Slides from the SAET 2016 presentation (old version of the paper)

• A previous version circulated with the title "Redistributive Politics, Power Sharing and Fairness", Luxembourg Income Study Working Paper Series, No 681, 2016

Abstract: This paper analyses a non-smooth model of probabilistic voting with two parties and a broad family of other-regarding behaviour, including fairness and quasi-maximin preferences, income-dependent altruism, and inequity aversion. The paper provides conditions for equilibrium existence and uniqueness. It also characterizes the Nash equilibrium in pure strategies when parties hold either symmetric payoffs, or minor forms of asymmetries. The characterization shows that the two parties converge to an equilibrium policy that maximizes a mixture of a "self-regarding utilitarian" social welfare function and an aggregate of society's other-regarding preferences. These results are shown to be applicable to other non-smooth frameworks, such as probabilistic voting with loss averse voters. The characterization also shows that the direction and the size of the inefficiencies emerging from electoral competition depend in a subtle way on the nature of the other-regarding preferences (and resp., loss aversion).

JEL Classification Codes: C72, D72, D78.

Key Words: Non-smooth Optimization; Probabilistic Voting; Other-Regarding Preferences; Loss Aversion; Redistribution; Swing Voter.

• Slides from the Online SCW Seminars presentation (May 11, 2021)

Abstract: We consider the problem of identifying members of a group based on individual opinions. Since agents do not have preferences in the model, properties of rules that concern preferences (e.g., strategy-proofness and efficiency) have not been studied in the literature. We fill this gap by working with a class of incomplete preferences derived directly from opinions. Our main result characterizes a new family of group identification rules, called voting-by-equitable-committees rules, using two well-known properties: strategy-proofness and equal treatment of equals. Our family contains as a special case the consent rules (Samet and Schmeidler, "Between liberalism and democracy", Journal of Economic Theory, 110(2), 2003), which are symmetric and embody various degrees of liberalism and democracy; and it also includes dictatorial and oligarchic rules that value agents' opinions differently. In the presence of strategy-proofness, efficiency turns out to be equivalent to non-degeneracy (i.e., any agent may potentially be included or excluded from the group). This implies that a rule satisfies strategy-proofness, efficiency, and equal treatment of equals if, and only if, it is a non-degenerate voting-by-equitable-committees rule.

JEL Classification Codes: C70, D70, D71.

Key Words: group identification; strategy-proofness; equal treatment of equals; symmetry; efficiency; voting-by-committees rules; consent rules.

• Slides from the ESWC 2015 presentation

• A previous version circulated with the title "Incentives, Fairness, and Efficiency in Group Identification", Discussion Paper EDP-1501, University of Manchester, 2015

• Supplementary material available in the Online Appendix

Abstract: We study a social choice model with partially honest agents, and we show that strategy-proofness is a necessary and sufficient condition to achieve secure implementation. This result provides a behavioural foundation for the rectangularity property; and it offers as a by-product a revelation principle for secure implementation with partial honesty. We apply the implementation concept to a single-crossing voting environment, and we prove that it characterizes, in combination with unanimity, the family of augmented representative voter schemes.