Negative Voters: Electoral Competition with Loss-Aversion

This paper studies how voter loss-aversion affects electoral competition in a Downsian setting. Assuming that the voters’ reference point is the status quo, we show that loss-aversion has a number of effects. First, for some values of the status quo, there is policy rigidity: both parties choose platforms equal to the status quo, regardless of other parameters. Second, there is a moderation effect when there is policy rigidity, the equilibrium policy outcome is closer to the moderate voters’ ideal point than in the absence of loss-aversion. In a dynamic extension of the model, we consider how parties strategically manipulate the status quo to their advantage, and we find that this decreases policy rigidity and increases moderation. Finally, we show that with loss-aversion, incumbents adjust less than challengers to changes in voter preferences, and as a result, favorable (unfavorable) preference shocks, from the point of view of the incumbent, intensify (reduce) electoral competition. These two predictions are new, and we test them using elections to US state legislatures, where we find empirical support for them.


Issue Date:
Dec 07 2015
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/270220
Language:
English
Total Pages:
52
JEL Codes:
D72; D81
Series Statement:
WERP 1063




 Record created 2018-03-29, last modified 2018-03-29

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