Guessing right and wrong : intra-party bargaining and electoral uncertainty : a game-theoretical study of policy-motivated factions and voters in a two-party democracy with a laboratory experiment

Abstract

How do political parties work on the inside? Which factors determine their policies? What is the place of the electorate in the functioning of parties? In the past two decades, the search for the answers to these questions have spurred a number of important contributions to the game theoretical literature on political parties that examined party politics either at the level of individual politicians and voters, or as a process involving factions- the intra-party groups of like-minded party members. This thesis attempts to expose the internal policy-setting mechanism of political parties by reconciling the logic of the two approaches. A formal model is introduced to describe how the two factions of a governing party decide on its official policy point in a one-dimensional policy space, and how their choice is assessed by the individual voters, whose policy preferences coincide with those of either of the factions. The theoretical predictions derived from the analysis of the model are evaluated with a laboratory experiment. The findings from the statistical evaluation of the experimental results confirm that the policy change that leads to the re-election of the party occurs in a fragile equilibrium characterised by a positive policy distance difference between the ideal points of the factions and voters, who see the electoral uncertainty as less important than the policy motivation. A negative policy distance difference tends to result in the re-election of the incumbent party on its current policy preserved by the factions. Still, the greater presence of imperfect information significantly increases incentives for a policy change and induces voter defection to the opposition if the current policy is retained, as shown by the theory and the experimental analysis. In general, this study places voters at the heart of intra-party policy-setting while benefitting our understanding of the collective aspect of factional bargaining and shedding a new light on the electoral success and policy stability of political parties.