Essays on Political Economy

Abstract

This collection of essays investigates issues related to elections and wars. In the first essay, we present an auction-type model of war and characterize its unique equilibrium. We offer three different explanations for the causes of wars. First, as an individual-level explanation of war, we show that wars occur due to information asymmetry between governments. Second, as a societal-level explanation of war, we show that countries have smaller armies, they fight less severe wars, and their citizens are better off in a democratic world than in an autocratic world. Finally, as a systemic-level explanation of war, we show that wars will completely disappear when one of the countries has absolute superiority in military technology.

In the second essay, we examine the impact of positive altruism, that is, voting for a candidate to please voters who prefer the same candidate, on policy choices of strategic candidates. We establish the existence of equilibrium consistent with Duverger's Law and polarization. We show that this equilibrium is unique. Moreover, our model offers a theoretical basis for the decrease in turnout and increase in polarization observed in the U.S. after the $1960$s. We also consider negative altruism, that is, voting for a candidate to anger voters who dislike the candidate, and show that it is qualitatively similar to positive altruism in terms of its effects on candidates, that is, the equilibria are consistent with Duverger's Law and polarization.

In the final essay, we offer an explanation to `policy convergence' in Downsian models of two-party systems with unidimensional policy space and to `paradox of voting' in large elections. In our model, voters vote to improve the lives of their fellow voters. Candidates are office motivated. They try to increase voter support and energize their base to win the election. The incentive to increase their voter support pushes candidates towards each other, while the incentive to energize their bases pulls them apart. We examine the trade-off between these two incentives and establish the existence of a unique equilibrium in which candidates diverge from each other and voters vote in high proportions.