War Chests and Information
delineated circumstances. This is possible because the model covers more than one election,
and thus, may better pick up intra- and inter-election dynamics.
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Dharmapala (2002) constructs a model of candidates, interest groups, and voters and
finds that if fund-raising effectiveness is correlated with legislative effectiveness, then early
fund-raising deter challengers. Goodliffe (2003a) proposes a model of campaign spending and
saving in repeated elections in which an incumbent saves money for the next election (i.e.
creates a war chest) because he faced a relatively weak challenger rather than creating a war
chest to deter strong challengers from entering. Finally, in a companion paper, Goodliffe
(2003b) examines a repeated election model with complete information where candidates
may raise, spend, and save money, and examines the circumstances where war chests deter
potential challengers, and where they would empirically appear to not deter challengers.
Previous empirical work has concentrated mainly on the deterrence motivation, and
have differing results. Goidel and Gross (1994), Hersch and McDougall (1994), and Box-
Steffensmeier (1996) find that war chests deter high quality challengers from entering against
U.S. House incumbents. Hogan (2001) finds that war chests deter challengers in state leg-
islative elections, particularly in states with less professional legislatures. In contrast, Squire
(1989, 1991), Milyo (1998), Ansolabehere and Snyder (2000) and Goodliffe (2001) argue that
war chests do not deter high (or low) quality challengers from entering. A few studies have
examined the savings motivation of incumbents. Squire (1991) finds that U.S. senators raise
more funds when they may face stronger challengers. Ansolabehere and Snyder “do not find
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Another difference is that Epstein and Zemsky divide incumbent strength into two categories– high or
low. The model I present treats incumbent strength as a continuous variable. However, both models divide
challenger quality into two categories.
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