We analyze risk taking behavior of banks in the context of spatial competition. Banks mobilize unsecured deposits by offering deposit rates, which they invest either in a prudent or a gambling asset. Limited liability along with high return of a successful gamble induce moral hazard at the bank...

This paper analyzes secession and group formation in the general model of contests due to Esteban and Ray (1999). This model encompasses as special cases rent seeking contests and policy conflicts, where agents lobby over the choice of a policy in a one-dimensional policy space. We show that in...

Many have observed that political candidates running for election are often purposefully expressing themselves in vague and ambiguous terms. In this paper, we provide a simple formal model of this phenomenon. We model the electoral competition between two candidates as a two-stage game. In the...

This paper characterizes a unique mixed strategy Nash equilibrium in a one-dimensional Downsian model of two-candidate elections with a continuous policy space, where candidates are office motivated and one candidate enjoys a non-policy advantage over the other candidate. We show that if...

We analyze conditions under which candidates' reputations may affect voters' beliefs over what policy will be implemented by the winning candidate of an election. We develop a model of repeated elections with complete information in which candidates are purely ideological. We analyze an...