Rosenberg Ch. 2
Chapter 2: A Theory of Founding Party Dominance
In the previous chapter, we laid out the puzzle of Founding Party dominance in
South Africa. Taking into account conventional race-based explanations, we employed a
broader, more instrumental lens to ask: how does the ANC maintain such overwhelming
political dominance while failing to deliver on material promises to large swathes of its
supporters? In the same spirit, this chapter develops our theory of Founding Party
dominance. Although clearly inspired by the South African experience, the theory aims to
explain the survival (and/or demise) of a wide range of founding parties, particularly
those operating in relatively open polities.
The chapter proceeds as follows. First, we place our theory in context by briefly
reviewing the relevant literatures on single-party dominance in general and “founding
parties” in particular. Next, we formalize the theory by modeling a simple, one-period
strategic interaction between a Founding Party and a group of citizens. After presenting
the model’s equilibria, we discuss its observable implications for Founding Party
systems. Finally, we present a few of the theory’s more compelling extensions.
Theory in Context
As summarized in Chapter 1, our theory of founding party dominance explores
how citizens’ beliefs about the party and their access to information impact the party’s
allocation of state resources and propaganda among voters in its coalition. More
specifically, we identify a so-called “benefit of the doubt” enjoyed by successful founding
parties. Driven by a party’s status as “founder” and the beliefs that reputation inspires,
1
Rosenberg Ch. 2
this benefit allows the party to deliver few goods and services in the present while
maintaining voters’ expectations of a much larger delivery in the future. As a result, the
party has more resources for rent seeking and for courting less forgiving voters in its
(generally broad) coalition. Given these advantages, we argue that maintaining—and
manipulating—citizens’ beliefs about the party are critical to founding party dominance.
Historical Roles and Reputations
The idea that a political party’s historical role undergirds its success (or lack
thereof) in the political arena is firmly entrenched in the literature on both dominant
parties in general and founding parties in particular. In a much-quoted phrase, Duverger
(1954) argues “a dominant party is dominant because people believe it is so…The party
is associated with an epoch.” (308). Analyzing a dominant party’s ability to fuse voters’
identification with the party with that of the state, Arian and Barnes (1974) assert that “it
may be virtually necessary for a party to preside over the establishment of a polity” (594).
In his landmark study Political Order in Changing Societies (1968), Samuel
Huntington argues that “the stability of the one-party [and dominant party] system
derives more from its origins than its character” (424, 429), and that “the strength of the
party derives from its struggle for power.” (426).1 According to Huntington, nationalist
and/or revolutionary (i.e. “founding) party strength doesn’t come simply from its
achievement of some over-arching political objective, like independence or majority rule
(though that certainly helps). In addition, the party is often the first to mobilize major
population groups, especially those living in rural areas. As such, the party (1) enjoys an
initial monopoly on the political loyalties of large swathes of new citizens; and (2) serves
a unifying structure for diverse groups of future citizens. Even more crucially for our
1
The longer the “struggle,” he writes, the stronger the party the longer its political dominance will last.
2
Rosenberg Ch. 2
purposes, Huntington also claims that founding parties inspire a so-called “politics of
aspiration” (324) among its newly politicized constituents, whereby the delivery of
current benefits may matter less than the hope of future gains. Essentially, Huntington
contends that a founding party’s delivery of some regime-level political good (i.e.
independence, regime change, or majority rule) not only makes their promises of
economic goods more credible, but also buys the party time to deliver them.
Huntington’s arguments about the relationship between a founding party’s
reputation and its political fortunes2 are echoed in analyses of single-party and dominantparty regimes in sub-Saharan Africa’s immediate post-colonial period (Apter 1955, 1965;
Wallerstein 1961; Zolberg 1964, 1966; Beinen 1970). These works demonstrate how
nationalist/liberation parties established varying degrees of dominance based on (1) the
extent and nature, apropo Huntington, of their “struggle for power;” (2) their first mover
advantage in mobilizing previously un-politicized populations; (3) their ability to
maintain resulting “broad church” coalitions; and (4) the credibility of their promises of
(re-)distribution and economic development.
Though tied less directly to a party’s
reputation, Collier (1982) demonstrates how “independence regimes” (100) in tropical
Africa that established themselves by way of elections—in other words, by mobilizing
voters—were more likely to survive than those that emerged via more top-down
processes like merging contesting parties or by force of arms.
Indeed, almost every major study of single-party dominance holds that nationalist
and/or liberation parties establish political dominance due largely to their status as what
we call a “founding party” [see, among others Tucker (1961), Blondel (1972), Pempel
(1990), Giliomee & Simkins (1999), Magaloni (2006) and Greene (2007)]. At the same
2
Also expressed in the 1974 compilation, w/ Henry Bienen, “Authoritarian Politics in Modern Societies.”
3
Rosenberg Ch. 2
time, most of these works—pointing to the lack of clear mechanisms between a party’s
historical credentials and its longer-term success3—highlight other factors in explaining
the maintenance of such dominance. In addition to the ‘social cleavage’-driven
explanations discussed in Chapter 1 (both general and South Africa-specific), scholars
have emphasized strategic choices of party leaders (Riker 1976; Arian & Barnes 1974;
Pempel 1990)—particularly centrism and adaptability—and the competition-stifling
effects of incumbency resource advantages and patronage (Magaloni 2006; Greene
2007).4
In elucidating the missing mechanisms of founding party dominance, our theory
builds on and complements the literature’s alternative explanations. We briefly review
those explanations below.
Strategic Elites: Centrism, Adaptability, and the Exploitation of State Resources
Many of the most compelling explanations for single-party dominance emphasize
the type of strategic choices made by party leaders to maintain their dominant positions.
3
These scholars treat dominant parties’ status as ‘founding’ or ‘liberation’ parties as epiphenomenal and
generally immaterial to the maintenance of dominance in the long term. Greene (2007) represents this
position well in arguing that it is “unlikely that the mechanisms that produce dominant rule [‘incumbents’
initial legitimacy as harbingers of national transformation’] also reproduce it over time.” As evidence,
scholars cite dominant parties’ general pragmatism and their relatively rapid abandonment of ‘founding
ideologies’ in the interest of maintaining office (Tucker 1961; Magaloni 2006). Pempel (1990) claims that
single-party dominance only really becomes a puzzle at all after the effects of founding party reputation
fade away. By contrast, I argue that even (and, arguably, especially) a pragmatic and non-ideological
dominant party has a clear stake in sustaining its founding party status.
4
Still others have pointed to the effects of political institutions. Scholars of African and Latin American
politics have argued that first-past-the-post (FPTP) presidential elections reduce the size of a party system,
as parties organize around presidential candidates or are co-opted, post-election, by a powerful executive
(Mozzafar 2004; van de Walle 2003; Mainwaring & Shugart 1996). At the same time, scholars of singleparty dominance in Southern Africa contend that parliamentary elections governed by closed-list
proportional representation (PR) allow dominant parties to mobilize large coalitions as one overwhelming
bloc (Giliomee & Simkins 1999; du Toit 1999; Piombo 2005).4 While both logics make sense, institutional
explanations for dominance are empirically inadequate. Although most instances of single-party dominance
have occurred in FPTP presidential systems, South Africa and Namibia employ PR, while India and
Malaysia are FPTP parliamentary systems. More broadly, according to empirical work by Greene (2007)
and Magaloni (2006), there is no statistically significant relationship between electoral institutions
(measured by district magnitude) and the incidence of single-party dominance.
4
Rosenberg Ch. 2
More specifically, these studies point to a dominant party’s centrism and its related
ability to keep opposition parties on the margins of the political arena. Riker’s (1976)
landmark analysis of the Indian Congress Party cites party elites’ consistent centrism as
key to maintaining its umbrella structure and ensuring its position as a Condorcet winner
against any potential competitor. In the same vein, Arian and Barnes (1974) contend that
dominant parties in Italy and Israel maintained sufficiently “flexible boundaries” to
capture and remain in the political center, keeping opposition parties on the periphery of
the issue space. Pempel’s (1990) wide-ranging study of dominant-party democracies
similarly emphasizes the benefits of ideological flexibility and cultivating broad-based
support. According to Pempel, a “dominant party is the one that plays this game well
enough to keep itself in power long enough so that it can continue enacting and
implementing policies that reinforce its power base” (pg. 12).
How do dominant parties defend these centrist, flexible positions over time? The
most recent approach to dominant party systems focuses on the party’s exploitation of
state resources. The fusion of party and state in a dominant party system, and the party’s
use of state resources to ensure re-election, is a component of each of the earlier studies
mentioned above. However, none of these articulate a positive theory of how such
exploitation leads to single-party dominance, as Kenneth Greene’s (2007) work purports
to do. Greene argues that dominant parties use state resources to co-opt the bulk of voters
and potential oppositionists, driving remaining opposition parties to the margins of a leftright issue space. Parties must “create a large public sector and politicize the public
bureaucracy” (27) to sustain this “dominant party equilibrium.” When the state shrinks,
so goes dominance.
5
Rosenberg Ch. 2
Beatriz Magaloni’s (2006) study of “hegemonic-party survival”—which, like
Greene’s, is also based on Mexico’s PRI—also highlights the central role of a dominant
party’s patronage machine in buying off voters and potential oppositionists, and
exacerbating coordination failure among the opposition. Because Magaloni puts greater
emphasis than Greene on the mechanisms of voter support for the party, she emphasizes
overall economic growth—as opposed to the size of the state—as the ultimate foundation
of patronage-based dominance. If times are good, Magaloni argues, most voters will not
risk access to an incumbent’s patronage in order to support an unknown challenger. If
times are bad, defection is less risky, and the dominant party’s patronage-based
‘punishment regime’—whereby disloyal localities are deprived of spoils—is less
effective. In the latter case, Magaloni echoes Greene in pointing to the size of the public
sector (as well as electoral fraud) as critical to dominance.
Our theory builds on the resource- and patronage-based explanations of political
dominance by introducing an additional dimension—a founding party’s historical
reputation and the beliefs they inspire among the citizenry—into the standard state
resources model. Indeed, in many ways our theory serves to unify the classic, qualitative
works of Huntington and Durverger with the more contemporary, formal analyses offered
by Magaloni and Greene. As demonstrated in detail below, we argue that the party’s
strategic allocation of state resources is driven by citizens’ beliefs about the party, beliefs
based first and foremost on the party’s historical credentials. Because citizens update
their beliefs over time, we further argue that variation in citizens’ access to information—
and thus their abilities to update accurately—impacts not only the allocation of resources,
but also the party’s decision to manipulate information by investing in propaganda. In
6
Rosenberg Ch. 2
this way, we view founding party status as a valuable strategic (albeit more ‘bottom-up’)
resource for an incumbent fortunate enough to enjoy it. Like any other incumbency
advantage, we expect founding party elites to exploit this resource in order to keep
winning votes, deter challengers, and maximize their own share of state resources.
The Model
Preliminaries In what follows, we present a simple game-theoretic model of strategic interaction
between an Incumbent Founding Party (I) and a Citizen Group (J).5 In this single-period
game, I attempts to secure re-election by J by offering the group a bundle of goods and
services (hereafter the “offer,” and labeled x). If J accepts x, I wins the group's electoral
support; if J rejects x, the group opts to support some Opposition (O). In addition to
offering x, I can invest in manipulating J's information environment; we label such
manipulation propaganda.
The game features a dynamic economy, the state of which (denoted π ) is revealed
by Nature. In the interest of parsimony, there are two possible states: a high growth state
( π H , or "good” times), and a low growth state (
€
, or “bad” times), π ∈ (π H , π L ) . The
former occurs with probability p, while the latter occurs with probability 1-p. Whichever
€
€
state, I observes it perfectly while J does not. Formally, J observes
the wrong state of the
economy with probability ε and observes the correct state with probability 1 − ε . In
effect, ε captures J's information environment: the lower ε , the more information J has
€ of the economy, and the more likely J is to €
about the true state
observe that state
€ €
5
A Citizen Group is defined demographically according to ethnic, economic, and/or spatial criteria, and is
assumed to vote as a bloc (CITES). The model can also be applied if we define J as an individual citizen.
7
Rosenberg Ch. 2
accurately. In substantive terms, ε is reduced (and accuracy is increased) by structural
characteristics like J's level of education; access to media; and exposure to members of
other citizen groups.
€
We denote the state observed by J (whether correct or incorrect) as πˆ . From
above, we know that J observes πˆ H with probability p × (1 − ε ) or (1 − p) × ε . Similarly,
J observes πˆ L with probability (1 − p) × (1 − ε ) or p × ε .
€
€
€
€
As described above, the model assumes
that citizens
hold beliefs about the
€
€ by the party’s€founding role—or, more concretely, its delivery
Founding
Party. Inspired
of some regime-level political good like independence or majority rule—these beliefs
represent a citizen’s judgment about whether the party is governing in her best interest or
not. More concretely, we posit that the Founding Party can be one of two types: 'True'
(I+) or 'Rent-Seeking’ (I-), I ∈ (I+, I-). A 'True' incumbent (a) always offers citizens a level
of goods and services that reflects the actual state of the economy; and thus (b) will
deliver on its material promises whenever it has the resources to do so. A 'Rent Seeking'
incumbent, by contrast, seeks to exploit its status as a Founding Party to extract rents
from office. As a result, it offers citizens the minimal level of goods and services needed
to secure re-election. Formally, we summarize J’s beliefs as beliefs about I’s type and
denote them with β . At the beginning of the game, β captures J’s prior belief that the
Founding Party is of type I+. Conversely, 1 − β represents J’s prior belief that the party is
of type I-€
.
€
J’s beliefs are dynamic; €
in other words, J can update its beliefs about I’s type. In
this framework, J observes two pieces of information on which to base that updating.
8
Rosenberg Ch. 2
First, J observes I's offer x, and second, J observes the state of the economy, πˆ .6 J
updates its belief about I's type before deciding whether or not to support the Founding
Party. We denote J's posterior beliefs as βʹ′ and 1 − βʹ′, respectively. €
We model J’s payoff to supporting the Founding Party as x + #"f , where the flow
€
€
payoff f represents J's future benefits
from being governed by an ‘True’ Founding Party.
Although these benefits may only become material !in the future, they nonetheless
represent significant value in the present by way of J's expectations about the potential of
the party to deliver down the line. In other words, f incorporates Huntington’s “politics of
aspirations” (1968) into the model. Straightforwardly, the value of f is mediated by J’s
(posterior) beliefs about the party’s type. If #" = 1, J is certain that it will always receive
the highest possible level of goods and services from the government; as a result, J is
! ultimately deliver on its promises. If β' = 0 , J knows
certain that the Founding Party will
that the party will ultimately never deliver on its material promises, eliminating the value
of those promises to J. Put simply, the product β' f summarizes €the value of J’s material
expectations of being governed by the founding party.
We can interpret the (current)€offer x not only as a bundle of goods and services
transferred from I to J, but also as a signal about I’s type—and thus the value to J of I’s
future promises. Moreover, because J observes the state of the economy (and, by A1
below, the size of I’s budget) with varying degrees of uncertainty (i.e ε ), the signal x is
noisy: J is uncertain about the extent to which the offer reflects the state of the economy.
This noise/uncertainty opens space for the so-called “benefit€ of the doubt,” whereby J
accepts a ‘low’ offer in the present while maintaining its expectations of a larger payoff
6
These pieces of information are related, as x can be interpreted as I’s signal to J about
π.
9
€
Rosenberg Ch. 2
in the future. Such acceptance is based in J’s belief that I’s offer is the best it can do
given the government’s economic constraints. More simply, it is based on J’s beliefs
about the type of founding party it is facing. For example, if J receives a ‘low’ offer but
observes a government with ample resources, it is reasonable for J to update its beliefs
away from believing I is governing in its interest (i.e. that I is ‘True’) and toward
believing that I is willfully failing to deliver (i.e. that I is ‘Rent-Seeking’), thus reducing
any “benefit of the doubt.”
Given this context, we posit that I may very well have an incentive to increase the
noise around its offer x—and thus influence the ability of J to update its beliefs—by
manipulating J’s ability to observe the true state of the economy. We label such
manipulation propaganda and assume it carries a cost m. Thus, I- can invest m monies in
increasing " by some amount k. While k will vary according to the effectiveness of the
propaganda, (" + k) is bounded by 1: no group can be more than 100 percent inaccurate.7
!
Because
I+ always makes a state-reflecting offer, it has no incentive to invest in
!
propaganda.
If re-elected, we posit that I receives—in addition to any rents—the flow payoff
ρ , which represents both I's ability to divide the budget in future rounds and any nonmaterial benefits from holding office (cites). We can now express the incumbent's utility
€
function as follows:
U I = (B − x − m) + ρ ,
(1)
where B represents the government’s budget and is roughly equal to π . Because a True
€
Founding Party will always make a truthful, state-reflecting offer and does not invest in
€
7
Or, of course, more than 100% accurate:
(ε + k) ~ [0,1].
10
€
Rosenberg Ch. 2
propaganda, (B - x - m) always equals 0 and I+ maximizes only ρ . Out of office and without access to state resources—including (most of) the levers
€ with the incumbent in the realm
of propaganda8—the Opposition (O) can only compete
of f, J’s expectations of future benefits from an opposition-ruled government. While J
cannot hold beliefs about O as a type of Founding Party per se, it can certainly hold
beliefs about how O would govern were it in power. More specifically, we posit that J
holds a belief δ about whether O is a 'good' type of party, i.e. whether O will govern in
its interest and make truthful, state-reflecting offers . Conversely, 1- δ captures J's belief
that €
O is a 'bad' type, i.e. that it is corrupt—or simply planning to govern in the interest of
€ way of future benefits) from
another group. Like β , δ ~[0,1], and J's expected payoff (by
rejecting the Founding Party and supporting O is summarized by δ f. We€can€now express J’s utility functions as follows:
⎧ x + βʹ′f
U J = ⎨
⎩ δf
if J ' Accepts' I's offer (and votes for the€Founding Party)
if J 'Rejects' I's offer (and votes for the Opposition)
(2)
Thus, J re-elects the Founding Party Incumbent if x + βʹ′f ≥ δf . Below, we refer to this as
€
the "accept condition." Strategy Profiles
€
A strategy profile for I specifies an action aI at each state of the economy,
π H and π L : sI = [aI (π H );aI (π L )] . If π = π H , I can (i) make a 'high' offer xH and invest m
in propaganda; (ii) offer xH without investing in propaganda (i.e. m = 0); (iii) make a 'low'
€
€
8
Given a sufficiently free media—such as the print media sector in post-apartheid South Africa—O could
also invest in propaganda to counter I’s efforts (i.e. counter-propaganda). In the interest of simplicity, we
could model such counter-propaganda implicitly in two ways: first, via ε , and second, via the parameter k,
which captures the effectiveness of I’s propaganda (described in greater below). O’s counter-propaganda
could theoretically decrease both parameters: alternative information sources could make J a more accurate
observer of the economy or they could reduce the effectiveness of I’s manipulations. In any case, (ε + k)
would decrease.
€
€
11
Rosenberg Ch. 2
offer xL and invest m in propaganda; (iv) offer xL without investing in propaganda; or (v)
abscond
with
the
entire
budget
(i.e.
x
=
0
=
m).
Thus:
aI (π H ) ∈ [(x H ,m);(x H ,0);(x L ,m);(x L ,0);(0,0)] . If π = π L , I can (i) make a 'low' offer xL
and invest m in propaganda; (ii) offer xL without investing in propaganda; or (iii) abscond
€
with the entire budget. Thus: aI (π L ) ∈ [(x L ,m);(x L ,0);(0,0)] .
€
A strategy profile for J specifies one of two actions—Accept or Reject—at each
of J's information €
sets: aJ (σJ ) ∈ (Accept, Reject). Denoted σJ , these sets include all
(feasible) combinations of I's offer x and J's observed state πˆ .
€
€
1
2
3
4
5
Thus: σJ ⇒ (x H , πˆ H ); σJ ⇒ (x L , πˆ H ); σJ ⇒ (x L , πˆ L ); σJ ⇒ (0, πˆ H ); and σJ ⇒ (0, πˆ L )
€
. The information set (x H , πˆ L ) is not feasible because the high offer xH is not possible if
€
π = π L (see A1 below). As a result, if J observes xH, it will be certain that π = π L . In
€
4
5
addition, in the interest of parsimony it makes sense to combine σJ and σJ into one
€
€
4
information set, σ J ⇒ (0, πˆ ) . If I absconds with the budget, it fully reveals its type as I-,
€
making J's observed state irrelevant to its strategic calculation (see below).
€
Assumptions
In light of the model’s preliminaries, we make the following assumptions:
A1.
I faces a fixed budget constraint. In the interest of simplicity, this budget is
roughly determined by the true state of the economy, i.e. B ≈ π . As a result, I
cannot offer xH if π = π L .9
9
€ by Magaloni (2006) and Greene
Returning briefly to the formal treatments of single-party dominance
(2007), note how this
assumption
tracks
Magaloni’s
supposition
that
the incumbent’s budget is determined
€
more by the state of the economy in general than by the size of the public sector in particular. This
treatment is more appropriate for explaining the maintenance of (and, in some cases, expansion of) singleparty dominance in contemporary environments of economic liberalization and public sector reform. In
South Africa (Hirsch 2005)—along with Botswana (Acemoglu, Robinson, and Johnson 2001) and Namibia
(du Toit 1999)—the dominant party (the BDP and SWAPO, respectively) has implemented a number of
liberal economic reforms without significant reductions in electoral support (or resorting to widespread
electoral fraud or repression); a similar, though admittedly more ambiguous case, can be made for the
UNMO in Malaysia (Ritchie 2004). In addition, the main opposition challengers in these systems have
12
Rosenberg Ch. 2
€
€
A2.
I observes π and its own type perfectly, and has full information about
p, β, ε , and k .
A3.
.
I strictly prefers re-election to absconding with the entire budget. Thus: ρ > B ≈ π
€
J strictly prefers to support I+ and vote out I-, regardless of x. Thus, J strictly
€
prefers to Reject any x if βʹ′ = 0 (i.e. if J believes I = I- with certainty)
and Accept
any x if βʹ′ = 1 (i.e. if J believes I = I+ with certainty). More formally,
xH
xL
x H < δf < x L + f , or
<δ <
+1.
f
f
€
Order of€Play
A4.
The game is played as follows (see Figure 1):
1. Nature (N) reveals the state of the economy ( π ) and I’s type (I+ or I-) 2. I offers x to J; I decides whether or not to invest amount m in propaganda (k)
€
3. J observes x and the state of the economy
( πˆ ); J updates its beliefs about I’s type
4. J Accepts (A) or Rejects (R) I’s offer
€
generally advocated for centrist economic policies that do not differ greatly from that of the dominant
party.
13
Rosenberg Ch. 2
Pure Strategy Nash Equilibria
In order to identify the pure strategy equilibria of the game, it is important to
note four ‘facts’ of the model. First, facing a high offer xH, J’s dominant strategy is to
Accept. Given A1, if J observes xH it can be certain that π = π H (i.e. that times are
“good”). Because such a high, state-reflecting offer is made by I+ or by I- exactly
mimicking I+, βʹ′ will always be large enough€ to satisfy the “accept condition”
1
x + βʹ′f ≥ δf . In terms of Figure 1, J always plays Accept at σJ . €
Second, and relatedly, I’s action (xH,m)—combining a high offer with
€
propaganda—is not feasible. Because observing €
xH eliminates any uncertainty about the
state of the economy, ε is forced to 0 and investing in propaganda becomes nonsensical. Third, J’s dominant strategy is to Reject the incumbent if it absconds with the
€ (i.e. offers x = 0). This action fully reveals the incumbent’s type as I- and
entire budget
14
Rosenberg Ch. 2
yields J zero utility, regardless of the observed state. Clearly, investing in propaganda in
this case would only reduce the size of I's payoff without affecting J’s decision to Reject,
4
so m = k = 0. In Figure 1, J always plays Reject at σJ . Fourth, if I offers xL, both Accept and Reject are potential best responses for J.
€ hold, J's actions must be consistent across the
Thus, for any pure strategy equilbrium to
2
3
two low-offer information sets, σJ and σJ . In light of these 'facts,' the model has three Pure Strategy Nash Equilibria (PSNE).
€
The first of these is incredibly
straightforward and flows directly from the definition of a
True Founding Party: if π = π H and I = I+, {(xH,0); Accept}10 is a PSNE. In good times,
I+ will always make a high offer, and J will always accept it, regardless of β, p, or ε .
€
Thus, a True Founding
Party blessed with a high growth economy will always be re€
elected. More interestingly, we can also identity a PSNE at {(xL,0),(xL,0); Accept},
whereby I- wins re-election by making a low offer in both states and does not invest in
propaganda. Given that J is playing Accept, (xL,0) is I-'s lowest-cost action (recall A3)
and the incumbent has no incentive to deviate to another strategy. For the equilibrium to
hold, the same must be true for J, requiring that the “accept condition” hold at both
σJ 2 and σJ 3 . Specifically: Proposition 1: {(xL,0),(xL,0); Accept} is a PSNE iff:
€
⎛
⎞
β(1 − p)ε
2
x L + ⎜
⎟ f ≥ δf at σJ ; and
(1
−
β
)
p(1
−
ε
)
+
β
(1
−
p)
ε
+
(1
−
β
)(1
−
p)
ε
⎝
⎠
(3)
10
€
In general, equilibria are notated as {I’s strategy; J’s strategy}. Below, equilibira are notated more
π H , I’s action at π L ; J’s action at σJ 2 ;€J’s action at σJ 3 }. We employ this form
1
4
because J’s actions at σJ and σJ are constant (always Accept and always Reject, respectively) given the
precisely as {I’s action at
‘facts’ of the model presented above.
€
€
€
€
€
€
15
Rosenberg Ch. 2
⎛
⎞
β(1 − p)(1 − ε )
3
x L + ⎜
⎟ f ≥ δf at σJ ,
(1
−
β
)
p
ε
+
β
(1
−
p)(1
−
ε
)
+
(1
−
β
)(1
−
p)(1
−
ε
)
⎝
⎠
(4)
where the terms in parentheses capture J's posterior beliefs ( βʹ′, via Baye's Rule) at the
€
€ specified information sets. Mathematically, it is clear that, ceteris paribus, Proposition 1
€
requires a relatively large β . Intuitively, if I- is to secure
re-election with a low offer and
without employing propaganda, J’s prior belief that the incumbent is a True Founding
€
Party must be relatively
firm. Re-arranging Equations 3 and 4 to pin down thresholds for
β (i.e. β *), we find:
€
€
δf − x L
[ p(1 − ε ) + (1 − p)ε ]
f
2
*
β ≥
at σJ ; and
L
δf − x
p(1 − ε ) + (1 − p)ε
f
(5)
€
€
δf − x L
[ pε + (1 − p)(1 − ε )]
f
3
β* ≥
at σJ .
L
δf − x
pε + (1 − p)(1 − ε )
f
(6)
€
€
To help interpret this equilibrium, we assume that
≤ ½; this restriction makes
sense for two reasons. First, outside of totalitarian settings, it is highly unlikely that J is
so inaccurate about the state of the economy that
—the probability that J observes the
opposite state from reality—is greater than ½. Second, the restriction ensures that β* at
σJ 2 —where J receives a low offer while observing a growing economy—must be greater
€
3
than β* at σJ —where J gets a low offer and observes a stagnant economy. To accept a
€
low offer, it is highly reasonable that J's priors about I's type would have to be more
€
€
favorable
when observing πˆ H than when observing πˆ L . Indeed, in the former scenario,
€
€
16
Rosenberg Ch. 2
J’s prior belief that the incumbent is ‘True’ must be quite robust to withstand clear
evidence to the contrary. Given our restriction on ε , we can determine the values of p and β for which
{(xL,0),(xL,0); Accept} is Nash. In the top panel of Figure 2, we hold ε at 0.25 (in the
€ track the values of β
middle of the restricted €
range) and plot p against β . Lines 2a and 2b
€ each line capturing β*
that satisfy inequalities 5 and 6, respectively, with the areas above
€ area above Line 2a satisfies both inequalities—
€
at the specified information sets. As the
2
3
€
again, if J accepts xL at σJ , it must do so at σJ as well—this area summarizes
the
conditions for p and β under which {(xL,0),(xL,0); Accept} is a PSNE. €
€ by a positive, “push-pull” relationship between
These conditions
are characterized
H
€
p and β : holding
ε constant, the more likely it is that π = π (i.e. the higher is p), the
stronger must be J's belief that I = I+ (i.e. the higher must be β ) for the equilibrium to
€
€ very favorable prior beliefs about the
hold. In€good times, then, only a group with
Founding Party will accept a low, rent accruing offer€from I-; groups with less favorable
beliefs will reject it (and require the party to make a higher offer to retain its support; see
Proposition 2 below). In this way, the equilibrium conforms to the “swing” voter
approach to party responsiveness and accountability ((Lindbeck & Weibull 1987; Dixit &
Londegran 1996), whereby a party neglects its “core” supporters—who are likely to vote
for the party regardless—in favor of less partisan groups. In the Founding Party context,
this equilibrium also presents us with a variation on the “benefit of the doubt” scenario
discussed above. In this case, J is sufficiently wedded to the Founding Party that it
believes the party will deliver in the future despite receiving a obviously low-ball offer in
the present. 17
Rosenberg Ch. 2
In bad times, I- mimics I+ with a low, state-reflecting offer. Per Figure 2, a low
offer will secure acceptance by groups with a wide range of priors when times are bad
and the incumbent’s budget is small.
The two lower panels of Figure 2 reveal how the {(xL,0),(xL,0); Accept}
equilibrium space changes in response to increases in ε . As J becomes less accurate,
Line 2a shifts downward: the β threshold ( β* ) for each value of p is lowered, and the
€
equilibrium space grows. At the same time, Line 2b—which, recall, summarizes "* at
€
€ 3
the more permissive "J —shifts up closer to Line 2a, reflecting the fact that as "
!
2
3
increases, the probabilities that J observes "ˆ H (at σJ ) and "ˆ L (at σJ ) will converge. In
!
!
words, a less accurate J has greater difficulty discerning good times from bad times—and
vice-versa. Notably, as
ε
!
!
*
increases, the €
downward shift β€
is larger in “good times” (p >
0.5) than in “bad times” (p < 0.5), revealing how J’s uncertainty about the state of the
€
economy grants I- greater scope to make a “low-ball,”
rent accruing offer.
€
At lower values of ε (i.e. as J becomes more accurate; see Figure 3), J is
increasingly able to distinguish different states of the economy; in these cases, the
probabilities that J€observes πˆ H and πˆ L diverge. As a result, Line 3a quickly loses
2
convexity,11 revealing a rising β* at σJ and a shrinking equilibrium space. At the same
€
€
time, Line 3b flattens out, more starkly separating "* at "J 3 from "J 2 . In good times,
€
€
then, only a group with extremely favorable prior beliefs about the Founding Party will
!
! conditions
! specified in Proposition 1
accept a low offer.12 In bad times, the equilibrium
11
Indeed, Line 4a becomes concave as ε approaches 0.
Other groups will update their beliefs sufficiently toward I- such that the mediated value of f will be
extremely low, causing rejection.
12
€
18
Rosenberg Ch. 2
become much less probable.13
The third and final PSNE of the game (see Appendix for proof) is found at
2
3
{(xH,0),(0,0); Reject}. Here—with J playing Reject at "J and "J —I-‘s best response
depends on the state of the economy. If " = " H , I- can avoid rejection by mimicking I+
!
1 !
and offering xH, in effect “moving” J to "J (where, as mentioned above, J always plays
!
Accept). If " = " L , I- cannot buy its way out of rejection: the most it can offer is xL,
which J will surely reject. As a!result, I- prefers to reveal its type and abscond with the
!
1
entire budget, “moving” J to "J (where J, observing x = 0, always plays Reject). As
revealed by Proposition 2 below, the conditions for the {(xH,0),(0,0); Reject} PSNE are
! of those for {(xL,0),(xL,0); Accept}.
simply the mirror images
13
Because an increasingly accurate J is very likely to identify bad times as such, it is very unlikely that J
σJ 2 [(x L , πˆ H )], doing so at σJ 3 [(x L , πˆ L )] instead. As a result, the equilibrium
L
H
area above Line 4a (the equilibrium conditions specified by Equations 3 and 5, i.e. at (x , πˆ ) ) is unlikely
will update its beliefs at
to apply to J.
€
€
€
19
Rosenberg Ch. 2
Figure 2
Nash Equilibria: ε = 0.25
β
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
PSNE:
x-l, x-l; Accept
Line 2a
MSNE
Line 2b
0
0.1
0.2
0.3
0.4
PSNE:
x-h, x = 0; Reject
p0.5
0.6
0.7
0.8
0.9
1
0.9
1
0.9
1
Nash Equilibria: ε =.35
β
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
PSNE:
x-l, x-l; Accept
PSNE:
x-h, x = 0; Reject
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
p
Nash Equilibria: ε =.45
β
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
PSNE:
x-l, x-l; Accept
PSNE:
x-h, x = 0; Reject
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
p
20
Rosenberg Ch. 2
Figure 3
Nash Equilibria: ε = 0.25
β
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
PSNE:
x-l, x-l; Accept
Line 3a
Line 3b
0
0.1
0.2
0.3
PSNE:
x-h, x = 0; Reject
0.4
p0.5
0.6
0.7
0.8
0.9
1
Nash Equilibria: ε =.15
β
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
PSNE:
x-l, x-l; Accept
PSNE:
x-h, x = 0; Reject
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.9
1
p
Nash Equilibria: ε =.05
β
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
PSNE:
x-l, x-l; Accept
PSNE:
x-h, x = 0; Reject
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
p
21
Rosenberg Ch. 2
Proposition 2: {(xH,0),(0,0); Reject} is a PSNE iff:
€
⎛
⎞
β(1 − p)ε
2
x L + ⎜
⎟ f ≤ δf at σJ ; and
⎝ (1 − β) p(1 − ε ) + β(1 − p)ε + (1 − β)(1 − p)ε ⎠
⎛
⎞
β(1 − p)(1 − ε )
3
x L + ⎜
⎟ f ≤ δf at σJ .
⎝ (1 − β) pε + β(1 − p)(1 − ε ) + (1 − β)(1 − p)(1 − ε ) ⎠
€
Re-arranging the equations to solve for the (upper)
€
2
at σJ ; and
€
δf − x L
p
ε
+
(1
−
p)(1
− ε )]
[
f
3
*
β ≤
at σJ .
L
δf − x
pε + (1 − p)(1 − ε )
f
(7)
(8)
thresholds yields:
€
(9)
(10)
For the converse reasons €
from Proposition 1, Proposition 2 requires a relatively
€ low β* to sustain the equilibrium (i.e. to sustain rejection at the low-offer information
2
3
3
sets σ J and σJ ). As above, we assume that ε < 1/2, ensuring that β* at σJ [(x L , πˆ L )]
€
€
2
must be less than β* at σJ [(x L , πˆ H )] : if J is going to reject I at the former, it will always
€
€
€
€ €
do so at the latter. Figure 2 graphs the {(xH,0),(0,0); Reject} equilibrium with ε = 0.25.
€ below
€ 5b satisfies Equations 8 and 10, which (for reasons just specified)
€ Line
The area
€ the conditions
must satisfy Equations 7 and 9 as well. As a result, this area summarizes
under which {(xH,0),(0,0); Reject} is a PSNE. To help interpret these conditions, recall that in this equilibrium J will reject any
low offer (note the lower area of Figure 2). Predictably, the more likely it is that times are
good (i.e. the higher is p), the more likely it is than even a group with favorable priors
22
Rosenberg Ch. 2
will reject xL, requiring I- to make a high offer to maintain its support.14 In bad times, the
relationship between p and β flattens out substantially: only a group with decidedly
unfavorable priors about the party will reject a low offer. If it does, I- will abscond with
the budget. €
Changes in ε affect the equilibrium conditions under which the {(xH,0),(0,0);
Reject} is sustained. As with the {(xL,0),(xL,0); Accept} equilibrium above, higher values
€ accurate J) force the probabilities that J observes "ˆ H and "ˆ L to converge
of ε (i.e. a less
for every value of p. Returning to Figure 2, we now look to the space below Line 2b to
€
! the range
!
summarize the equilibrium space, which grows along with
of β below which J
will reject a low offer.
€ of ε also decrease the
At the same time, we already know that higher values
range of β above which J will accept a low offer, increasing the scope of the
€ in
{(xL,0),(xL,0); Accept} equilibrium. What’s more, increases
ε actually increase the
€applicability of the Accept PSNE more than that of the Reject PSNE at nearly every value
€ of the economy is more likely
of p.15 In good times, then, J’s uncertainty about the state
to help I ‘low-ball’ J than it is to force to make J a high, state-reflecting offer. In bad
times, a less accurate J (ceteris paribus) is still more likely to accept a low offer than to
reject it and stop supporting the incumbent (unless, of course, " is sufficiently low).16
Lower values of ε (i.e. a more accurate J) shrink the equilibrium space and pull
2
3
! 3): the lower is , the better is J
apart the “reject” conditions at σJ and σJ (see Figure
ε
€
at distinguishing bad times from good times, and vice-versa. In good times, the
€
14
As is clear in Figures 2 €
and 3, as p€
approaches 1 every group will reject I’s low offer in equilibrium.
15
This generalization breaks down as p approaches 1.
This accords with our restriction on " : in bad times when resources are scarce, even an extremely
inaccurate J is unlikely to believe the incumbent’s budget is very big—there are simply fewer resources to
observe.
16
!
23
Rosenberg Ch. 2
equilibrium conditions specified in Proposition 2—whereby J updates its beliefs at the
3
“wrong” σJ [(x L , πˆ L )] —become much less applicable as " decreases.17 In bad times, as J
becomes increasingly certain of the state of the economy, J’s beliefs about I must be
€increasingly unfavorable to sustain rejection of !
a low offer.
In good times, then, the theory does not allow for rejection—given adequate
resources, a ‘rent-seeking’ incumbent always prefer to give J a high offer (mimicking a
‘true’ incumbent and foregoing rents) rather than lose its support. While J might believe
the incumbent to be corrupt before observing such an offer, this belief is countered by the
high-offer signal, which J is sure to accept. In bad times, however, the rent-seeking
incumbent no longer has the resources to “buy” acceptance in this way, and a citizen or
group with sufficiently unfavorable beliefs about the party will reject the party even if
given a state-reflecting offer. In other words, bad times force a rent-seeking incumbent to
“face the music” of its failure to deliver to its constituents. Stepping briefly outside the
strict confines of the model, we can imagine the entirely realistic scenario whereby a
founding party which is able to maintain its coalition while collecting rents in “good
times” is suddenly unable to do either when times turns bad.
However it occurs, a founding party facing rejection abandons any claim to
support and legitimacy among J and opts to purse blatantly kleptocratic policies vis-à-vis
the group. Of course, the party may still be able to maintain power over J via coercion
and/or by incorporating other groups into its coalition. The model is currently silent on
these possibilities; below, we speculate on them in more detail.
17
Because an increasingly accurate J is very likely to identify good times as such, it is very unlikely that J
σJ 3 [(x L , πˆ L )], doing so at σJ 2 [(x L , πˆ H )] instead. As a result, the equilibrium
L
L
area below Line 4b (the equilibrium conditions specified by Equations 3 and 5, i.e. at (x , πˆ ) ) is unlikely
will update its beliefs at
to apply to J.
€
€
€
24
Rosenberg Ch. 2
Before discussing any mixed strategy equilibria, an additional point warrants
mention. The above analysis has been conducted with " —J’s belief that the Opposition
is “good”—set at 0.3, a value that satisfies Assumption 4 but still implies an opposition
!
held in relative disregard by J. This parameterization
is realistic for a Founding Party
system, particularly if the opposition is believed to represent the ancien regime
(Huntington 1968); in these cases, J is unlikely to vest much credibility in the
opposition’s promises of future benefits from its rule. Still, it is important to note that,
ceteris paribus, higher values of " (i.e. a better-regarded opposition) would make
Proposition 1 (i.e. the Accept PSNE) more difficult to satisfy while making Proposition 2
!
((i.e. the Reject PSNE) easier
to satisfy. As a result, a more credible opposition will
reduce a founding party’s scope for rent seeking in good times and make sustaining J’s
support more challenging in bad times.
Mixed Strategy Nash Equilibrium
Where our PSNE do not exist—note the areas between the equilibrium spaces in
Figures 2 and 3—we must look for mixed strategy Nash equilibria (MSNE). The game
features
{µʹ′ (x
L
a
unique
(see
Appendix
for
proof)
MSNE
at
,m), (1 − µʹ′)(x H ,0), (x L ,0); γ (Accept), (1 − γ )(Reject), Accept} . In words, this
equilibrium requires I- to mix between its action (xL,m) and (xH,0) if π = π H (with
€
probabilities µʹ′ and 1 − µʹ′ , respectively) and to play the pure strategy (xL,0) if π = π L . At
€2
the same time, J mixes between its actions Accept and Reject at σJ (with probabilities γ
€
€
€
3
and 1 − γ , respectively) and plays the pure strategy Accept at σJ (with probability λ =
€
€
1). As above, I+ always makes state-reflecting offers; J always accepts xH and rejects x =
€
€
€
25
Rosenberg Ch. 2
0; and
≤ ½.
To construct this equilibrium, we assume an m/k ratio—the cost-to-effect ratio of
propaganda—that is small enough to ensure that (xL,m) strictly dominates (xL,0) at π H
(we label this assumption A5; see Appendix for proof).18 In words, we assume
€ state of the
propaganda is sufficiently effective at influencing J’s ability to observe the
economy that I- will bear its costs when J’s acceptance of a low offer is uncertain. At π L ,
(xL,0) strictly dominates (xL,m), and I- does not invest in propaganda: constrained to
€
making a low offer, the incumbent has no incentive to increase the probability
that J
observes a high growth economy when times are in fact bad.19 Because (xL,0) also strictly
dominates (0,0) in the mixed strategy parameter space, J plays the former with probability
1 (see Appendix for proofs).
Amending Equations 1 and 3 to find the conditions under which I- and J play
mixed strategies,20 we characterize the equilibrium as follows:
Proposition 3: {µʹ′ (x L ,m), (1 − µʹ′)(x H ,0), (x L ,0); γAccept, (1 − γ )Reject, Accept} is
a MSNE if < ½ and:
€
; and
(11)
ρ+m
− λ(ε + k)
ρ+r
, where λ = 1.
γ=
1 − (ε + k)
(12)
€
€ 18 Given A3, we already know that (xH,0) strictly dominates (0,0) at π H .
19
Somewhat counter-intuitively, then, the incumbent employs economic propaganda only to downplay the
state of the economy and never to inflate the state of the economy. This conclusion is interesting in its own
right and deserves further analysis.
H
20
I.e., the conditions under which I- is indifferent between
€ (xL,m) and (xH,0) at π and J is indifferent
between Accept and Reject at
σJ 2 .
€
€
26
Rosenberg Ch. 2
To interpret this equilibrium, we conduct comparative statics on Equations 11.21 Note that
analyses apply when π = π H (i.e. in “good times,” when I- is playing mixed strategies).
Ceteris paribus: 1.
€ ∂µ /∂β > 0 The more favorable a group's prior beliefs about the incumbent's type, the more likely is
€
the incumbent
to invest in propaganda and make a low offer to that group. By contrast, a
group with less favorable prior beliefs is more likely to receive the state-reflecting offer
xH.
2.
∂µ /∂ε > 0 :
The less accurate a group, the more likely it is to be targeted with propaganda and a low
offer€
by the incumbent. As J becomes more accurate, the incumbent is more likely to
make a high offer instead. 3.
∂µ /∂k > 0 :
As the effectiveness of propaganda increases, the incumbent is more likely to invest in it
(and €
make a low offer).
∂µ /∂δ < 0 :
4.
The more favorable a group’s beliefs about the opposition, the less likely is the
€
incumbent
to "low-ball" the group with a low offer and propaganda, and the more likely
the group will receive a high offer instead. The less favorable a group’s beliefs about the
opposition, the more likely it will be targeted with a low offer and propaganda. 21
Conducting the only relevant comparative static on Equation 12 ( ∂γ /∂ε < 0 ) produces non-sensible
results that are artifacts of the two state set-up of the model. Specifically, the results imply that, as J
becomes a more accurate observer of the state of the economy, the group will be more likely to accept xL at
σJ 2 [(x L , πˆ H )]. This does not make sense is either good or bad times: a more accurate group would never
2
€
be more likely to accept a low offer at σ J
27
€
€
Rosenberg Ch. 2
To better understand this MSNE, it is useful to consider all the equilibria in toto22
and to recall that increases in ε force the probabilities that J observes πˆ H and πˆ L to
2
converge. As a result, the gap between β* for the Accept PSNE (determined at σJ ) and
€
€
€
β* for the Reject PSNE (determined at σJ 3 ) is reduced, and the mixed strategy
€
€
equilibrium space is shrunk (see Figure 3). At the same time, we know that increases in ε
€
increase the likelihood that I- will €
target J with propaganda and a low offer in that space.
€
In other words—and in good times— higher values of ε increase the probability
the
(reduced) mixed strategy equilibrium space will be “filled” with propaganda and low
€
offers. In this vein, it is helpful to think of I’s investment in propaganda as a way to
“push” J toward the Accept equilibrium—where the group will accept a low offer—and
away from the Reject equilibrium—where the group will rejects that offer and receives a
high offer instead. Because the distance between these two equilbria is small, the
propaganda is more likely to be effective. Put more concretely, propaganda simply
2
3
increases the probability that J observes I’s low offer at σJ rather than σJ —the larger
is k, the higher that probability. In this way, propaganda is a tool employed by the
€
€
Founding Party to justify a low offer in good times.
This conception
is simply the formal
expression of the intuition spelled out above: in order to maintain its “benefit of the
doubt” while low-balling J, the Founding Party has a clear incentive to invest in ‘doubt.’
Lower values of ε force the probabilities that J observes πˆ H and πˆ L to diverge,
expanding the ‘space’ between the pure strategy and the mixed strategy equilibria. In
€
22
€
€
To help do so, return briefly to Figures 2 and 3, and recall that: a) the areas above Line 2a and 3a
summarize the conditions (for p, β, and ε ) under which the Accept PSNE is satisfied; b) the areas below
Lines 2b and 3b summarize the conditions under which the Reject PSNE is satisfied; and c) the MSNE
applies to the areas in between the lines (where no PSNE apply).
€
28
Rosenberg Ch. 2
addition, we know that an increasing ε reduces the probability that I- will invest in
propaganda and increases the probability that it will make a high offer instead. In light of
€ a lot of sense: if J is a more accurate observer of the
the discussion above, this makes
economy, propaganda is less likely to “push” J toward accepting a low offer, making it
less likely to be a worthwhile investment.
Independent of ε , it is clear that the more effective the Founding Party’s
propaganda (i.e. the higher is k given m), the more likely that the party will invest in it.
€ party possess a technology that greatly obscures J’s ability to observe
Thus, should the
the state of the economy (i.e. one that drives k toward its upper-bound of ½), it may be
targeted even at otherwise accurate groups. Put another way, k represents the size of the
“push” made possible by propaganda. The larger the potential push, the more likely it
will be worthwhile for the Founding Party to shove.
Using this framework to interpret how variation in β effects a Founding Party’s
strategy is rather straightforward. Looking at the mixed equilibrium spaces in Figures 23, it is clear that the larger is β , the more likely J€will be located “near” Line 2a/3a and
the Accept PSNE. Thus, the more likely it is that J can be “pushed” into accepting a low
offer in good times€by the incumbent’s propaganda. Of course, the reverse is true for
variation in δ .
€
Observable
Implications
The first observable implications of the theory stem from our definitions of
β and ε :
€
29
Rosenberg Ch. 2
1. Citizens with more favorable beliefs about the Founding Party are more likely to
believe that the party will ultimately deliver on its material promises than citizens
with less favorable beliefs.
2. Citizens in low-information environments are less accurate observers of the state of
the economy—and thus the size of the incumbent’s budget—than citizens in highinformation environments.
a. Citizens in lower-information environments are less likely to observe
incumbent rent seeking than citizens in higher-information environments.
To help lay out further implications, we consolidate the equilibrium analyses discussed
above in Figures 4 and 5. In essence, the figures summarize “who gets what” and how the
party maintains dominance among different types of groups. In general, note that, ceteris
paribus:
3. The Founding Party maintains the support of citizens in low-information
environments by providing them with fewer goods and services than citizens in highinformation environments.
a. This discrepancy is more pronounced in “good times”—when the government
enjoys a larger budget—than in “bad times.”
In “good times,” ceteris paribus:
4. The Founding Party maintains the support of citizens with more favorable beliefs by
providing them with fewer goods and services than citizens with less favorable
beliefs.
30
Rosenberg Ch. 2
Figure 4: π = π H
Benefit of the Doubt
€
1
Increase Doubt
via Propaganda
0
1
5. Low-information groups with highly favorable beliefs (i.e. “core” voters) are the
‘cheapest’ backers of the Founding Party: they are most likely to accept a minimal
amount of goods and services from the government, even without the party investing
in propaganda. In short, they are the most likely to give the party “the benefit of the
doubt.”
a. The more low-information, “core” voters a Founding Party counts among its
supporters, the more rents it can accrue while maintaining popular support (ala
Bates 1981).
6. High-information groups with relatively unfavorable beliefs (i.e. “swing” voters) are
the most costly backers of the Founding Party: they require a large amount of goods
31
Rosenberg Ch. 2
and services from the government to maintain their support. They are least likely to
give the party the “benefit of the doubt.”
a. The more high-information, “swing” voters a Founding Party counts among
its supporters, the fewer rents it can accrue while maintaining popular support.
7. Ceteris paribus, the Founding Party will be more likely to target propaganda (i.e.
increase ‘doubt’) at citizens in lower-information environments than at citizens in
higher-information environments.
a. Citizens with middling access to information (i.e. peri-urbanites or more
educated ruralites) are most likely to be targeted.
8. Citizens with middling access to information and mid-range beliefs about the
Founding Party are the most likely citizens to be targeted with propaganda.
a. Propaganda is more likely to be targeted at high-information citizens if they
are also very partisan supporters of the incumbent.
b. Among low-information citizens, propaganda will be targeted at those with
middle-to-low beliefs about the Founding Party.
9. Citizens with more favorable beliefs about the opposition will:
a. Require more goods and services to continue supporting to the incumbent; and
b. Are less likely to be targeted with propaganda.
In “bad times:”
10. If citizens’ beliefs are relatively favorable, the Founding Party maintains popular
support despite the government’s provision of few good and services to its citizens.
a. In this case, the Founding Party accrues fewer rents than in “good times.”
11. If citizens’ beliefs are unfavorable, they will reject the Founding Party.
32
Rosenberg Ch. 2
a. In this case, the Founding Party becomes completely rent seeking vis-à-vis
these citizens
12. Citizens with more favorable beliefs about the opposition will be more likely to reject
the incumbent.
L
Figure 5: π = π
1
€
(0,0);
Reject
0
Compelling Extensions/Speculations
To conclude this chapter, we will speculate on two particularly compelling
extensions of the theory. First, we will consider how the theory might incorporate a more
traditional approach to political propaganda, whereby the incumbent emphasizes its
historical role and founding credentials (and denigrates the credentials of its opposition).
Second, we will consider how a Founding Party may sustain power if a majority of
citizens’ best responses are to reject it.
A More Traditional Approach to Propaganda
33
Rosenberg Ch. 2
Above, the incumbent uses propaganda to manipulate a group’s ability to observe
the state of the economy and justify a low offer in good times. As such, propaganda is
used to affect how citizens update their beliefs about the incumbent. If propaganda is
effective, the Founding Party is better able to low-ball citizens (and accrue rents) while
maintaining their beliefs that the party is ‘True’ to its founding role and reputation, and
will thus ultimately deliver on its material promises.
To the same end, what if the incumbent used propaganda to manipulate these
beliefs directly, ‘before’ a citizen updates those beliefs?
While theoretically less
interesting,23 this possibility accords with a significant literature on political propaganda
in Founding Party systems (CITES). Many of these works focus on an incumbent’s
efforts to emphasize its history, reminding citizens both of its role in the “struggle” and of
its delivery of independence or majority rule. In terms of the model, I attempts to buffer
its status as a “True” Founding Party independent of its offer to J or of the state of the
economy.
Using the model’s theoretical framework, we can represent this type of
propaganda as an added value (l) to J’s prior belief β , or β +l. We can then ask: how
might this “type l” propaganda affect the equilibria of the game? Because J’s prior
€ via J’s observation of x and πˆ , it
beliefs, manipulated or not, will always be€updated
makes a lot of sense to investigate l within the confines of the existing model. And while
we cannot explicitly ask or answer under which conditions I- will invest€in l,24 we can
23
As will be described below, employing this type of propaganda is less strategic and more a political
“given” than manipulating citizens’ ability to the state of the economy.
24
To do so, we would need to include such an investment among I’s available actions and strategies, which
would in fact require the construction of an separate (and significantly more complex) model.
34
Rosenberg Ch. 2
strongly speculate on the question by noting the effects of an additive shift in β on the
equilibrium outcomes described above.
Indeed, we already know the effects of an increased β in €
the mixed strategy
equilibrium space: the probability that I- will combine a low offer with (type k)
€
propaganda in good times increases, while the probability
that I- makes a high, statereflecting offer decreases. Moreover, recalling Propositions 1 and 2, the effects on our
pure strategy equilibria are extremely straightforward. β +l would make Proposition 1
easier to satisfy—expanding the applicability of {(xL,0),(xL,0); Accept}—and make
€
Proposition 2 more difficult to satisfy—reducing
the applicability of {(xH,0),(0,0);
Reject}. All these effects are clearly to the benefit of the incumbent, allowing it to more
easily accrue rents in good times and maintain support with a state-reflecting offer in bad
times. Thus, one might conclude that—so long as it was not prohibitively expensive to do
so—a “rent-seeking” Founding Party would always employ this kind of propaganda. Figures 2 and 3—depicting, once again, all the equilibria at different level of ε —
reveal a more nuanced picture. To begin with, let us assume that l, like k, cannot be too
large;25 in other words, type l propaganda cannot starkly increase a group’s€prior beliefs
about the Founding Party. Rather, it can only buffer these beliefs at the margin. Given a citizen group that already satisfies Proposition 1, propaganda is
unnecessary: the group will accept a low offer without it. However, if a group’s
characteristics ( β and ε ) and the state of the world (p) leave the group short of this
threshold—as defined by Equation 5—type l propaganda might become an attractive
option€for the€incumbent, enabling it to induce acceptance. In effect, the propaganda
25
Of course, β +l must be upper-bounded by 1.
35
€
Rosenberg Ch. 2
would simply shift Lines 2a and 3a down by l. In good times, this shift would expand I-‘s
scope for rent seeking;26 in bad times; it would help ensure acceptance.
A similar analysis can be applied to Proposition 2. Given our assumption that l
cannot be very large, a group firmly planted at the lower reaches of the β range will
always reject a low offer, making type l propaganda useless. However, if a “rejecting” J
€ could “move” J out
falls close to the threshold defined by Equation 10, type l propaganda
of the Reject PSNE space, in effect shifting Lines 3a and 3b down by l. In this case, the
incumbent’s use of propaganda would save it from rejection in bad times and give it a
shot at rent seeking27 in good times.
As revealed by Figure 3, the incumbent’s use of type l propaganda is an
especially compelling possibility at higher values of ε , whereby J is increasingly
uncertain about the state of the economy. In these cases, the addition of l to β + l could
actually “move” a group satisfying the Reject €
PSNE to satisfying the Accept PSNE—
particularly in bad times.28 Graphically, Line 2a could shift down€to include a group
previously included below Line 2b (which would also shift down given β + l ). Thus, an
incumbent that employed type l would ensure acceptance in bad times. In good times, the
€ seeking. And, if ε was
incumbent could at the very least increase its potential for rent
very high, it could very well ensure it.
Crackdown and Coercion: Extending the ‘Reject’ Equilibrium
€
26
In this way, type l propaganda provides J with an even more explicit “push” into the Accept equilibrium
space than type k propaganda. Because our discussion of type l propaganda is so primitive, it is not worth
speculating about whether, in the cases specified above, the incumbent would prefer to invest in type k
propaganda, type l propaganda, or both.
27
J would be “moved” to the MSNE space.
28
In good times, this “switch” is only possible as ε approaches its (still restricted) limit at 0.5.
36
€
Rosenberg Ch. 2
As mentioned briefly above, our theory depicts the founding party’s challenge as
maintaining power in the context of a relatively competitive political system, whereby
opposition parties exist and compete (albeit at a distinct disadvantage) for citizens’ votes.
As such, when J ‘rejects’ the founding party and removes itself from the party’s coalition,
J opts to support some opposition force O, represented by the alternative flow payoff δf .
In the interest of parsimony, our theory excludes many of the factors—the probability
€
that O could actually take power; the size of J versus other groups in the founding
party’s
coalition—that should ideally be included in modeling the causes and consequences of
this decision. Nevertheless, here we briefly speculate on the outcome and its implications
for founding party dominance.
To that end, let us assume that J is a sufficiently large group that its support is
integral to the founding party’s dominant position but not so large as to threaten the
incumbent’s ability to win elections. In this case, the party has two primary spending
options: it can absorb as rents the portion of its budget previously allocated to J (as the
model specifies, per Magaloni’s “punishment regime’), or it can use those resources to
try bring another group into its coalition to compensate for the loss of J. The party may
also try to prevent J from defecting to the opposition by investing in tools of physical
coercion, using them crackdown on both J and the party’s newly empowered opposition.
Given the significant costs of a coercive apparatus (CITES), we can expect a rent
seeking party—concerned primarily with maintaining power to ensure its access to state
resources—to pursue coercion only if J is large enough to threaten its electoral success.
[Of course, if other groups have also defected (or are likely to defect) from the founding
party’s coalition, the likelihood of this scenario increases.] In this case, the incumbent
37
Rosenberg Ch. 2
may crackdown on the opposition and its supporters while maintaining the façade of
political competition (see: Zimbabwe), or it can attempt to eliminate all challengers and
effect a one-party state (myriad examples). We discuss these outcomes in much greater
detail in Chapter 7, considering the possibility that a dominant incumbent’s investment in
propaganda and restrictions on alternate information sources may be a leading indicator
of a crackdown on political opposition and the advent of authoritarian politics in
previously open founding party systems.
38
Rosenberg Ch. 2
APPENDIX Proof 1:{(xL,0),(xL,0); Accept}, {(xH,0),(0,0); Reject}, and {(xH,0); Accept} (if " = " H
and I = I+) are the only PSNE of the game. If J is playing Accept (i.e. accepting xL for sure), I-`s best response is to always play
(xL,0). If acceptance is ensured, J has no incentive to ever invest in k,!to offer xH, or to
abscond (which ensures rejection). If J is playing Reject, (i.e. rejecting xL for sure), A3 tells us that I-`s best response is to
always avoid rejection by offering xH whenever feasible (i.e. in “good” times); investing
in m does nothing to avoid rejection in this case. If xH is not feasible (i.e. in “bad” times),
I-`s best response is to abscond; investing in k does nothing to prevent rejection. Proof 2: {µʹ′ (x L ,m), (1 − µʹ′)(x H ,0), (x L ,0); γ (Accept), (1 − γ )(Re ject), Accept} is a
unique MSNE. 2a.
€Given A3, I-`s action (x H ,0) strictly dominantes (0,0) if " = " H . In addition,
(x L ,m) strictly dominantes (x L ,0) so long as:29
((1 − (ε + k))γ (r + ρ ) + (ε + k) λ (r + ρ ) > (1 − ε )γ (r + ρ ) + ελ(r + ρ)
€
€
€
k( λ − γ )(r€
+ ρ) > m
m
k>
( λ − γ )(r + ρ)
!
By contrast, (x L ,m) cannot dominante (x L ,0) when π = π L because:30
(ε + k)(γρ − m) + (1 − (ε + k))( λρ − m) > εγρ + (1 − ε ) λρ
k(γ − λ) ρ > m
m
k >€
is non - sensical
(γ − λ ) ρ
€
For a similar reason we know that I cannot be indifferent between (x L ,0) and (0,0) when
π = π L :31
€
€
29
€
Because k must be positive this condition is sensible. λ - the probability that J accepts a low offer at
σJ 3 (x L , πˆ L ) should always be larger than γ - the probability that J accepts a low offer at σJ 2 (x L , πˆ H )
2
L
H
30
The condition is nonsensical because γ - the probability that J accepts a low offer at σJ (x , πˆ ) 3
L
L
cannot be higher than λ - the probability that€
J accepts a low offer at σJ (x , πˆ ) .
31
Again, γ cannot be higher than
€ λ.
€
€
€
€
39
€
€
€
Rosenberg Ch. 2
ρ[γε − ( λ (1 − ε ))] = π L
L
γε − π ρ
λ≠
1−ε
2b.
2
If J is indifferent between Accept and Reject at σ J (x L , πˆ H ) , J will play Accept for certain
3
at σJ (x L , πˆ L ) :
€
2
€
€
€
€
J’s indifference condition at σJ is: €
⎛
⎞
β(1 − p)ε
x L + ⎜
⎟ f = δf
⎝ β(1 − p)(1 − ε ) + (1 − β) pµ(1 − (ε + k)) + (1 − β)(1 − p)ε ⎠
€
3
J’s indifference condition at σJ is:
⎛
⎞
β(1 − p)(1 − ε )
x L + ⎜
⎟ f = δf
⎝ β(1 − p)(1 − ε ) + (1 − β) pµ(ε + k) + (1 − β)(1 − p)(1 − ε ) ⎠
€
1
2
3
Given that ε ≤ , we know that if J is indifferent at σJ the indifference condition at σJ
2
cannot hold. More specifically, we know the LHS will be greater than δf , such that J will
3
always accept x L at σJ .
€
€
€
€
3
L ˆL
σ
(x
, π ) , J will always reject x L
By the
same
token,
we
know
that
if
J
is
indifferent
at
J
€
€
2
(i.e. play Reject for certain) at σJ (x L , πˆ H ) . This possibility, however, is nonsensical: if γ
2
(the probability that J accepts xL at σJ ) equals 0, then I’s best response function when
3
π = π H requires that λ (the probability that €
J accepts xL at σJ ) is greater than€1:
€
€
Per Equation 12:
€ ρ+m
ρ+m
−
λ
(
ε
+
k)
−γ
€
€
ρ+r
ρ+r
γ=
→λ =
+γ
1 − (ε + k)
(ε + k)
€
40
Rosenberg Ch. 2
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