Endogenous majority rules with changing preferences

This paper provides a new explanation why several US states have implemented supermajority requirements for tax increases. We model a dynamic and stochastic OLG economy where individual preferences depend on age and change over time in a systematic way. In this setting, we show that the first population of voters will choose a supermajority rule in order to influence the outcomes of future elections. We explore the robustness of the basic model and also find some empirical support for predictions derived from the model

Candidate Competition and Voter Learning in the 2000-2012 US Presidential Primaries

When candidates in primary elections are ideologically differentiated (e.g., conservatives and moderates in the Republican party), then candidates with similar positions affect each others’ vote shares more strongly than candidates with different ideological positions. We measure this effect in U.S. Presidential primaries and show that it is of first order importance. We also show that voter beliefs about the candidates harden over the course of the primary, as manifested in the variability of candidate vote shares. We discuss models of sequential voting that cannot yield this pattern of results, and propose an explanation based on a model with horizontally and vertically differentiated candidates and incompletely informed voters. Consistent with the predictions of this model, we also show that, in more conservative states, low quality conservative candidates do better relative to high quality conservatives, and vice versa

Learning and coordination in the presidential primary system

In elections with three or more candidates, coordination among like-minded voters is an important problem. We analyse the trade-off between coordination and learning about candidate quality under different temporal election systems in the context of the U.S. presidential primary system. In our model, candidates with different policy positions and qualities compete for the nomination, and voters are uncertain about the candidates' valence. This setup generates two effects: vote splitting (i.e. several candidates in the same policy position compete for the same voter pool) and voter learning (as the results in earlier elections help voters to update their beliefs on candidate quality). Sequential voting minimizes vote splitting in late districts, but voters may coordinate on a low-quality candidate. Using the parameter estimates obtained from all the Democratic and Republican presidential primaries during 2000-12, we conduct policy experiments such as replacing the current system with a simultaneous system, adopting the reform proposal of the National Association of Secretaries of State, or imposing party rules that lead to candidate withdrawal when prespecified conditions are met

Endogenous Categorization in Insurance

This paper analyzes the welfare properties of equilibrium when insurers use observable actions to classify consumers into different risk categories, and consumers' choice is influenced by the insurance market consequences of their actions. Specifically, we analyze this problem at the example of a car insurance market, in which individual preferences over car types are correlated with risk type and used by insurance firms for ratemaking. Equilibrium premiums for each car are determined by the losses that it generates. Consumers take insurance premiums into account when deciding which car to buy. This creates an incentive to buy the car that is preferred by more low risk individuals. From a utilitarian point of view, this incentive is excessive. Depending on parameters, it may even be possible to construct a tax-subsidy scheme with balanced budget that Pareto improves on the market equilibrium. Copyright � 2008 Wiley Periodicals, Inc..