Political Competition in Hard Times

This paper analyzes a spatial model of political competition between two policy- motivated parties in hard times of crisis. Hard times are modeled in terms of policy- making costs carried by a newly elected party. The results predict policy divergence in equilibrium. If the ideological preferences of parties are quite diverse and extreme, there is a unique equilibrium in which the parties announce symmetric platforms and each party wins with probability one half. If one party is extreme while the other is more moderate, there is a unique equilibrium in which the parties announce asymmetric platforms. If the preferred policies of the parties are not very distinct, there are two equilibria with asymmetric platforms. An important property of equilibrium with asymmetric platforms is that a winning party necessarily announces its most preferred policy as a platform. JEL classification: D72. Keywords: Spatial model; Political competition; Two-party system; Policy-motivated parties; Hard times; Crisis.

ICTINEUAUV wins the First SAUC-E competition

A pioneer team of students of the University of Girona decided to design and develop an autonomous underwater vehicle (AUV) called ICTINEU-AUV to face the Student Autonomous Underwater Challenge-Europe (SAUC-E). The prototype has evolved from the initial computer aided design (CAD) model to become an operative AUV in the short period of seven months. The open frame and modular design principles together with the compatibility with other robots previously developed at the lab have provided the main design philosophy. Hence, at the robot's core, two networked computers give access to a wide set of sensors and actuators. The Gentoo/Linux distribution was chosen as the onboard operating system. A software architecture based on a set of distributed objects with soft real time capabilities was developed and a hybrid control architecture including mission control, a behavioural layer and a robust map-based localization algorithm made ICTINEU-AUV the winning entry

A continuous strain-space model of viral evolution within a host

Viruses rapidly evolve, and HIV in particular is known to be one of the fastest evolving human viruses. It is now commonly accepted that viral evolution is the cause of the intriguing dynamics exhibited during HIV infections and the ultimate success of the virus in its struggle with the immune system. To study viral evolution, we use a simple mathematical model of the within-host dynamics of HIV which incorporates random mutations. In this model, we assume a continuous distribution of viral strains in a one-dimensional phenotype space where random mutations are modelled by di ffusion. Numerical simulations show that random mutations combined with competition result in evolution towards higher Darwinian fitness: a stable traveling wave of evolution, moving towards higher levels of fi tness, is formed in the phenoty space.

Electoral competition through issue selection

Politics must tackle multiple issues at once. In a first-best world, political competition constrains parties to prioritize issues according to the voters' true concerns. In the real world, the opposite also happens: parties manipulate voter priorities by emphasizing issues selectively during the political campaign. This phenomenon, known as priming, should allow parties to pay less attention to the issues that they intend to mute. We develop a model of endogenous issue ownership in which two vote-seeking parties (i) invest to attract voters with "better" policy proposals and (ii) choose a communication campaign to focus voter attention on specific issues. We identify novel feedbacks between communication and investment. In particular, we find that stronger priming effects can backfire by constraining parties to invest more resources in all issues, including the ones they would otherwise intend to mute. We also identify under which conditions parties prefer to focus on their "historical issues" or to engage in issue stealing. Typically, the latter happens when priming effects are strong, and historical reputations differentiates parties less.

Anisotropic dispersion, space competition, and the slowdown of the Neolithic transition

The front speed of the Neolithic (farmer) spread in Europe decreased as it reached Northern latitudes, where the Mesolithic (huntergatherer) population density was higher. Here, we describe a reaction diffusion model with (i) an anisotropic dispersion kernel depending on the Mesolithicpopulation density gradient and (ii) a modified population growth equation. Both effects are related to the space available for the Neolithic population. The model is able to explain the slowdown of the Neolithic front as observed from archaeological data

Interbank Competition with Costly Screening

We analyse credit market equilibrium when banks screen loan applicants. When banks have a convex cost function of screening, a pure strategy equilibrium exists where banks optimally set interest rates at the same level as their competitors. This result complements Broecker s (1990) analysis, where he demonstrates that no pure strategy equilibrium exists when banks have zero screening costs. In our set up we show that interest rate on loans are largely independent of marginal costs, a feature consistent with the extant empirical evidence. In equilibrium, banks make positive profits in our model in spite of the threat of entry by inactive banks. Moreover, an increase in the number of active banks increases credit risk and so does not improve credit market effciency: this point has important regulatory implications. Finally, we extend our analysis to the case where banks have differing screening abilities.

Bargaining, coalitions and competition

We study a decentralized matching model in a large exchange economy,in which trade takes place through non--cooperative bargaining in coalitionsof finite size. Under essentially the same conditions of core equivalence, we show that the strategic equilibrium outcomes of our model coincide with theWalrasian allocations of the economy. Our method of proof exploits equivalenceresults between the core and Walrasian equilibria. Our model relaxes differentiability and convexity of preferences thereby covering the caseof indivisible goods.

Dynamic price competition with fixed capacities

Many revenue management (RM) industries are characterized by (a) fixed capacities in theshort term (e.g., hotel rooms, seats on an airline flight), (b) homogeneous products (e.g., twoairline flights between the same cities at similar times), and (c) customer purchasing decisionslargely influenced by price. Competition in these industries is also very high even with just twoor three direct competitors in a market. However, RM competition is not well understood andpractically all known implementations of RM software and most published models of RM donot explicitly model competition. For this reason, there has been considerable recent interestand research activity to understand RM competition. In this paper we study price competitionfor an oligopoly in a dynamic setting, where each of the sellers has a fixed number of unitsavailable for sale over a fixed number of periods. Demand is stochastic, and depending on howit evolves, sellers may change their prices at any time. This reflects the fact that firms constantly,and almost costlessly, change their prices (alternately, allocations at a price in quantity-basedRM), reacting either to updates in their estimates of market demand, competitor prices, orinventory levels. We first prove existence of a unique subgame-perfect equilibrium for a duopoly.In equilibrium, in each state sellers engage in Bertrand competition, so that the seller withthe lowest reservation value ends up selling a unit at a price that is equal to the equilibriumreservation value of the competitor. This structure hence extends the marginal-value conceptof bid-price control, used in many RM implementations, to a competitive model. In addition,we show that the seller with the lowest capacity sells all its units first. Furthermore, we extendthe results transparently to n firms and perform a number of numerical comparative staticsexploiting the uniqueness of the subgame-perfect equilibrium.

Strategic ambiguity in electoral competition

Many have observed that political candidates running for election areoften purposefully expressing themselves in vague and ambiguous terms. In thispaper we provide a simple formal model of this phenomenon. We model theelectoral competition between two candidates as a two--stage game. In thefirst stage of the game two candidates simultaneously choose their ideologies,and in the second stage they simultaneously choose their level of ambiguity.Our results show that ambiguity, although disliked by voters, may be sustainedin equilibrium. The introduction of ambiguity as a strategic choice variablefor the candidates can also serve to explain why candidates with the sameelectoral objectives end up ``separating'', that is, assuming different ideological positions.

Competition and cost overruns. Optimal misspecification of procurement contracts

Most cases of cost overruns in public procurement are related to important changes in the initial project design. This paper deals with the problem of design specification in public procurement and provides a rationale for design misspecification. We propose a model in which the sponsor decides how much to invest in design specification and awards competitively the project to a contractor. After the project has been awarded the sponsor engages in bilateral renegotiation with the contractor, in order to accommodate changes in the initial project s design that new information makes desirable. When procurement takes place in the presence of horizontally differentiated contractors, the design s specification level is seen to affect the resulting degree of competition. The paper highlights this interaction between market competition and design specification and shows that the sponsor s optimal strategy, when facing an imperfectly competitive market supply, is to underinvest in design specification so as to make significant cost overruns likely. Since no such misspecification occurs in a perfectly competitive market, cost overruns are seen to arise as a consequence of lack of competition in the procurement market.

Allocating ideas: Horizontal competition in tournaments

We develop a stylized model of horizontal and vertical competition intournaments with two competing firms. The sponsor cares about the qualityof the design but also about the design location. A priori not even thesponsor knows his preferred design location, which is only discoveredonce he has seen the actual proposals. We show that the more efficientfirm is more likely to be conservative when choosing the design location.Also, to get some differentiation in design locations, the cost differencebetween contestants can neither be too small nor too big. Therefore, ifthe sponsor mainly cares about the design location, participation in thetournaments by the two lowest cost contestants cannot be optimal for thesponsor.

Competition amongst contests

This article analyses the allocation of prizes in contests. While existing models consider a single contest with an exogenously given set of players, in our model several contests compete for participants. As a consequence, prizes not only induce incentive effects but also participation effects. We show that contests that aim to maximize players aggregate effort will award their entire prize budget to the winner. In contrast, multiple prizes will be awarded in contests that aim to maximize participation and the share of the prize budget awarded to the winner increases in the contests randomness. We also provide empirical evidence for this relationship using data from professional road running. In addition, we show that prize structures might be used to screen between players of differing ability.

Competition and cost overruns in procurement

Most cases of cost overruns in public procurement are related to important changes in theinitial project design. This paper deals with the problem of design speciffication in public procurement and provides a rationale for design misspeciffication. We propose a model in which the sponsor decides how much to invest in design speciffication and awards competitively the project to a contractor. After the project has been awarded the sponsor engages in bilateral renegotiation with the contractor, in order to accommodate changes in the initial project's design that new information makes desirable. When procurement takes place in the presence of horizontally differentiated contractors, the design's speciffication level is seen to affect the resulting degree of competition. The paper highlights this interaction between market competition and design speciffication and shows that the sponsor's optimal strategy, when facing an imperfectly competitive market supply, is to underinvest in design speciffication so as to make signifficant cost overrunslikely. Since no such misspeciffication occurs in a perfectly competitive market, cost overruns are seen to arise as a consequence of lack of competition in the procurement market.

Negativity effect in multiparty electoral competition

We construct a dynamic voting model of multiparty competition in order to capture the following facts: voters base their decision on past economicperformance of the parties, and parties and candidates have different objectives. This model may explain the emergence of parties' ideologies,and shows the compatibility of the different objectives of parties and candidates. Together, these results give rise to the formation ofpolitical parties, as infinetely-lived agents with a certain ideology, out of the competition of myopic candidates freely choosing policy positions. We also show that in multicandidate elections held under the plurality system, Hotelling's principle of minimum differentiation is no longer satisfied.

Mixed equilibrium in a Downsian model with a favored candidate

This paper examines competition in the standard one-dimensional Downsian model of two-candidate elections, but where one candidate (A) enjoys an advantage over the other candidate (D). Voters' preferences are Euclidean, but any voter will vote for candidate A over candidate D unless D is closer to her ideal point by some fixed distance \delta. The location of the median voter's ideal point is uncertain, and its distribution is commonly known by both candidates. The candidates simultaneously choose locations to maximize the probability of victory. Pure strategy equilibria often fails to exist in this model, except under special conditions about \delta and the distribution of the median ideal point. We solve for the essentially unique symmetric mixed equilibrium, show that candidate A adopts more moderate policies than candidate D, and obtain some comparative statics results about the probability of victory and the expected distance between the two candidates' policies.