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Campaign War Chests, Entry Deterrence, and Voter Rationality

26 Pages Posted: 6 Feb 2003  

Dhammika Dharmapala

University of Chicago Law School

Abstract

It is often claimed that the accumulation of "war chests" by incumbents deters entry by high-quality challengers in Congressional elections. This paper presents a game-theoretic analysis of the interaction between an incumbent, potential challengers, an interest group, and a representative (rational) voter, where the incumbent's "quality" (or "legislative effectiveness") is known to the interest group, but not to the voter or to potential challengers. Under certain conditions, a perfectly revealing equilibrium exists; the incumbent signals her quality by raising funds from the interest group to accumulate a war chest. The entry deterrence effect thus operates solely through the role of war chests in signaling incumbent quality.

Suggested Citation

Dharmapala, Dhammika, Campaign War Chests, Entry Deterrence, and Voter Rationality. Economics and Politics, Vol. 14, pp. 325-350, 2002. Available at SSRN: https://ssrn.com/abstract=342556

Dhammika Dharmapala (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

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