A fundamental concern to scholars who study American politics centers on how resources spent in election campaigns influence electoral outcomes. This question is of interest for at least two reasons. First, it logically precedes several important issues in democratic theory: Can parties and candidates with large amounts of money buy their way into powerful political offices? Does the need for money by those who seek office allow individuals and interest groups who control large sums of money, and who contribute to election campaigns, to wield "too much" influence on policy outcomes? Second, it is necessary to understand the role of money and other resources in election campaigns in order to predict the likely effects of various campaign finance regulations, such as campaign spending limits, contribution limits, and publicly subsidized elections. This project focuses on the resource allocation problems faced by political parties that are involved in a number of simultaneous but distinct electoral contests. Specifically, how should a party allocate its campaign resources across the various contests in order to maximize its objectives? Such problems arise naturally in legislative elections with single-member districts and first-past-the-post electoral rules, such as Canada, Great Britain, India, New Zealand and the U.S., and in U.S. presidential elections under the electoral college with the "unit- rule." The Principal Investigator treats campaign spending as a form of advertising, which increases the probability that a candidate wins the office he or she is seeking. Since only one of the candidates competing for an office can win, spending by a candidates' opponents also affects his or her probability of winning. The researcher employs a game-theoretic framework to capture this interaction. The project involves theoretical and empirical components. In the theoretical work, the researcher will analyze several different models of campaign resource allocation. The models vary in 1) the number of competing parties, 2) the objective functions of the various parties, 3) certain details of the "electoral production function" (i.e., how campaign resources are translated into votes), such as the differences between incumbents and challengers, and 4) whether the world is treated in a rather static fashion, with a single election (or, alternatively, parties are extremely "myopic," concerned only with the current election), or in a more dynamic fashion, with a sequence of elections in which the outcome of one election may affect the outcomes of future elections. In the empirical work, the researcher tests the various models on data for the Canadian general elections of 1979, 1980, and 1984. Then, using the best of these models, he estimates the effects of campaign spending, incumbency, and so on, on the election outcomes, using the appropriate formulas. Besides adding to the stock of knowledge about specific issues in elections and campaign finance, this research is novel in that it uses game-theory to guide very closely the specification of empirical tests. In fact, there have been very few attempts to test game-theoretic models empirically, and to treat carefully the econometric problems involved in identifying and estimating these models.
