Ideological Contests with Quality Investments

Abstract

We consider an asymmetric contest in which policy-motivated players make proposals with both a spatial location and a “quality" component, which must be generated at an up-front cost. Potential applications include elections, legislative policymaking, lobbying, expertise acquisition in bureaucracies, and judicial opinion writing. We show that equilibria are essentially unique and in two-dimensional mixed strategies, and provide an elegant analytical characterization of strategies, outcomes, and payoffs that yields many results. In equilibrium, more extreme proposals are both higher quality and strictly better for the decision-maker. A more ideologically extreme or able player is more likely to make a proposal, and makes more extreme proposals, but is also more likely to win due to their proposals' substantially higher quality. Simultaneously, her opponent is harmed and moderates her own proposals. When the players are highly asymmetric one almost always wins, but the decision-maker may nevertheless strongly benefit from the potential for competition.