Fabio Michelucci Spoke on 'Electoral Competition with Dynamic Campaign Contributions'

On September 29 a research seminar on political economy took place at HSE.  The event was organized by the HSE Faculty of Economic Sciences and the New Economic School. Fabio Michelucci (CERGE-EI) presented the report on 'Electoral Competition with Dynamic Campaign Contributions'.

Abstract:

We study a two-period dynamic principal agent model in which two agents with different abilities compete in a contest for a single prize by exerting effort. A risk-neutral principal can affect the outcome of the contest by dividing a given budget between agents in each period. The principal net payoff depends on the relative share of the budget given to the winner of the contest. Since agents' abilities are not observable and effort levels not contractible, the principal faces a trade-off between experimentation and selection. The results we derive are consistent with a number of stylized facts regarding the dynamics of US campaign contributions.