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In an electoral market, if voters cannot distinguish between good- quality and bad-quality candidates before voting, bad-quality can- didates may drive good-quality ones out of the election market: this is known as electoral lemon problem. That is, good-quality candidates may not win the election against bad-quality populist ones. This electoral lemon problem due to adverse selection can be eliminated or reduced by the screening by voters or by the sig- naling by high-quality candidates. Voters can screen candidate quality or candidates may send signal to voters. We attempt to examine the signaling model by candidates to inform voters that they are of high quality through campaign advertising and its ex- penditures. We examine a signaling model to explain the empirical results in which incumbent candidates have substantial positive ef- fect on votes and also ine±cient outcome from higher spending. Campaign expenditures can increase vote productivity. The cam- paign advertising of candidates serves to identify the candidates who possess high-quality characteristics. In reality, campaign ex- penditures can be spent by candidates for the purpose of sending a signal for candidate's personal quality. But quality signaling is often unproductive and thus results in the ine±cient outcome.
In an electoral market, if voters cannot distinguish between good-quality and bad-quality candidates before voting, bad-quality candidates may drive good-quality ones out of the election market:this is known aselectoral lemon problem. That is, good-qualitycandidates may not win the election against bad-quality populistones. This electoral lemon problem due to adverse selection canbe eliminated or reduced by the screening by voters or by the signaling by high-quality candidates. Voters can screen candidatequality or candidates may send signal to voters. We attempt toexamine the signaling model by candidates to inform voters thatthey are of high quality through campaign advertising and its expenditures. We examine a signaling model to explain the empiricalresults in which incumbent candidates have substantial positive effect on votes and also inecient outcome from higher spending.Campaign expenditures can increase vote productivity. The campaign advertising of candidates serves to identify the candidateswho possess high-quality characteristics. In reality, campaign expenditures can be spent by candidates for the purpose of sendinga signal for candidate's personal quality. But quality signaling isoften unproductive and thus results in the inecient outcome.
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Electoral Lemon Problem; Campaign Expenditures;Candidate Quality; Quality Signaling; Bayesian Equilibrium
