The game theory of the electoral threshold April 7, 2019 in Uncategorized Israel is holding an election Tuesday. It’s a multi-party system in Israel, based on proportional representation, and the main battle is between two blocs of parties. We call them the left-wing bloc and the right-wing bloc, and civics textbooks will tell you that this division is about policy: the Arab-Israeli conflict, economics and the role of religion. But let’s face it, nobody cares about public policy anymore. It’s all about Bibi. Parties that intend to form a coalition under Bibi belong to the right-wing bloc and parties that intend to rid the country of him belong to the left wing bloc. In addition to the battle between the blocs, there is also a contest between the parties in each bloc,
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Israel is holding an election Tuesday. It’s a multi-party system in Israel, based on proportional representation, and the main battle is between two blocs of parties. We call them the left-wing bloc and the right-wing bloc, and civics textbooks will tell you that this division is about policy: the Arab-Israeli conflict, economics and the role of religion. But let’s face it, nobody cares about public policy anymore. It’s all about Bibi. Parties that intend to form a coalition under Bibi belong to the right-wing bloc and parties that intend to rid the country of him belong to the left wing bloc.
In addition to the battle between the blocs, there is also a contest between the parties in each bloc, especially between one big party and several satellites. Bibi, in particular, is expected to use the final days of the campaign to siphon votes from satellites to his own Likud party, as he did in previous elections. Indeed, in recent days, Bibi and his social media fans said that the number of seats of the Likud party compared to the major opponent (called BlueWhite), and not the size of the blocs, will determine whether Bibi will form the government again. BlueWhite makes the same argument to left-wing voters.
But if Bibi is serious about cannibalizing his bloc, he could use a more fatal argument by appealing to the electoral threshold, that is the minimum share of total votes that a party has to achieve to be entitled to seats in the parliament. The current threshold 3.25%, which translates to roughly five seats in the 120-seat parliament. This sounds like a low threshold, but there are eleven parties in the current parliament, some of them have split into two, there are new parties that are serious contenders, and Likud and BlueWhite together are expected to win about half of the total votes. So many small parties are close to the threshold in the opinion polls. Since the two blocs are almost tied (with a small advantage to the right-wing bloc), the electoral threshold might end up playing a significant role in determining the outcome if many votes are cast to a party that doesn’t cross the threshold.
Enter game theory
It is difficult to do a game-theoretic analysis of anything election because we don’t have a good explanation for what drives voters to stand in line in the voting booth rather than go to the beach. Let me bypass this issue and just assume that you gain some utility from voting to your favorite party. So assume for simplicity that right-wing voters have two options, Likud or New Right (NR), which is one of the new parties in the right-wing bloc, whose leaders Bibi detests. According to the polls, 4% of the voters are New Right supporters. These guys will get utility 2 if they vote New Right and utility 1 if they vote Likud. And here is the twist: you only get this utility if the party you vote to passes the electoral threshold. If it doesn’t, you feel like your vote has been wasted and you get utility 0.
Whether or not an NR supporter will vote her preference depends on what she thinks the other supporter will do. In fact, NR supporters are involved in a population stag hunt game (sometimes called investment game). There are two Nash equilibria in the game: either everyone votes NR or everyone votes Likud. The first equilibrium requires players to take the risky action of voting NR, and if they all go along, they all get high utility 2. I have played variants of the investment game in class several times. Typically, players go for the safe choice, which in this case is Likud. If you do this, you guarantee yourself a utility 1 regardless of what the other players do.
How could the potential voters of NR coordinate on the risky equilibrium which gives a higher utility? I think the public opinion polls have a big role here. In the recent polls, NR has been consistently hovering above the threshold. The polls make it commonly known that there are sufficiently many potential NR voters, and also that they plan to go along with voting NR.
Suppose however that on Monday Bibi hints that his internal polls show that NR does not cross the threshold. What would our NR supporter do? She will likely know that there are no such polls since most Bibi supporters know that he is a lier. But perhaps other players will believe Bibi and switch to voting Likud, which will drive NR below the threshold. Or perhaps other players will worry that some other players will believe him. You see where this is going: to play the risky equilibrium, you need confidence that the other players are playing it too. Bibi can shake this confidence even if he can’t change the fact that NR has enough supporters to cross the threshold if they all collaborate.
By the way, I believe that established parties that are already represented in the parliament are less vulnerable to such an attack, since the confidence of their supporters in the risky equilibrium is stronger, as they played it once already.
Go ahead Bibi, make my day.