Incumbent reputations and ideological campaign contributions in spatial competition

This paper develops an equilibrium model of incumbent-challenger spatial competition with campaign contributions. In the model, contributions serve to provide information about the attributes of the candidates to the risk-averse electorate. Incumbents are distinguished from challengers by voters' perceptions-without contributions, an incumbent who is located at his ''reputation'' is a less risky lottery than any challenger, but this risk-advantage deteriorates as the incumbent's position deviates from his reputation-as well as by their strategic positions: the incumbent moves first and the challenger moves second. Also, each candidate takes into account the contributions that both candidates receive in (Cournot-Nash) contributor equilibrium. It is shown that for any pair of positions, in contrast to the standard case of refundable contributions, if contributions are non-refundable, then for every pair of candidate positions, contributor equilibrium exists and is unique, and incumbent-challenger equilibrium exists and is unique. The equilibrium effects of contributions on the candidates' positions and probabilities of winning are shown to depend on the relative strengths of contributions and reputation.

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