The Seeds of Negativity: Knowledge and Money

42 Pages Posted: 27 Jul 2010

See all articles by Mitchell J. Lovett

Mitchell J. Lovett

Simon School of Business – University of Rochester

Ron Shachar

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship

Date Written: October 27, 2010

Abstract

This paper studies the tendency to use negative ads. For this purpose we focus on an interesting industry (political campaigns) and an intriguing empirical regularity (the tendency to “go negative” is higher in close races). We present a model of electoral competition in which ads inform voters either on the good traits of the candidate or on the bad traits of his opponent. We find that in equilibrium the proportion of negative ads depends on both voters’ knowledge and the candidate’s budget. Furthermore, for an interesting subset of the parameter space, negativity increases in both knowledge and budget. Using data on the elections for the US House of Representative in 2000, 2002 and 2004, we examine the model and its implications. Using non-structural estimation we find that negativity indeed increases in both voters’ knowledge and the candidate’s budget. Furthermore, we also find that knowledge and budget mediate the effect of closeness on negativity. Using structural estimation we reinforce these findings. Specifically, we find that the model’s parameters are within the subset of the parameters space discussed above. Thus, the evidence implies that the model is not only helpful in identifying variables that were ignored by previous studies (i.e., knowledge and budget) but also in explaining an intriguing empirical regularity.

Suggested Citation

Lovett, Mitch and Shachar, Roni, The Seeds of Negativity: Knowledge and Money (October 27, 2010). Simon School Working Paper No. FR 10-33, Available at SSRN: https://ssrn.com/abstract=1649489 or http://dx.doi.org/10.2139/ssrn.1649489

Mitch Lovett (Contact Author)

Simon School of Business – University of Rochester ( email )

300 Crittenden Blvd.
Rochester, NY 14627
United States

Roni Shachar

Interdisciplinary Center (IDC) Herzliyah - Adelson School of Entrepreneuship ( email )

P.O. Box 167
Herzliya, 46150
Israel

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