Electoral Risk and Vote Buying, Introducing Prospect Theory in the Experimental Study of Clientelism
P4-1
Presented by: Hector Bahamonde
Leveraging on the expected utility theory framework, most research asserts that parties in need of securing electoral support invest in vote buying. We consider this framework is limited because it assumes that losses and gains affect party's decision-making process in a comparable way, and because it assumes that the decision-making process of clientelist political parties focuses only on absolute levels of utilities while overlooking changes in outcomes respect to a reference point. We hypothesize that parties are risk averse in the domain of gains and risk-seeking in the domain of losses---i.e., losing an election hurts more than winning an election pleases. This explains why clientelism is most likely when parties are probable winners or have experienced important losses in the past. After formalizing a theory of vote buying and vote selling within the expected utility theory, we tested it in the lab by designing an economic experiment. Exploiting these novel experimental data, we show that prospect theory provides a better explanation of clientelism than do other theories based on the expected-utility theory.