title:         Estimating Incumbency Advantage and Campaign Spending Effect without the Simultaneity Bias
authors:       Kentaro Fukumoto
entrydate:     2006-07-16 10:29:38
keywords:      Incumbency Advantage, Campaign Spending, Simultaneity Bias, Bayesian Nash equilibria, normal vote
abstract:      In estimating incumbency advantage and campaign spending effect, simultaneity problem is composed of stochastic dependence and parametric dependence. Scholars have tried to solve the former, while the present paper intends to tackle the latter. Its core idea is to estimate parameters by maximizing likelihood of all endogenous variables (vote, both parties' candidate qualities and campaign spending) simultaneously. In order to do it, I take advantage of theories of electoral politics rigorously, model each endogenous variables by the others (or their expectation), derive Bayesian Nash equilibria, and plug them into my estimator. I show superiority of my model compared to the conventional estimators by Monte Carlo simulation. Empirical application of this model to the recent U.S. House election data demonstrates that incumbency advantage is smaller than previously shown and that entry of incumbent and strong challenger is motivated by electoral prospect.

http://polmeth.wustl.edu/retrieve.php?id=617

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