Assignment task:
Consider the following citizen-candidate model. Citizens have a one-dimensional policy preference, which is distributed uniformly on [0, 1]. Each citizen gets higher utility the closer the implemented policy is to her preference. Each citizen votes, but she can also choose to run for office by paying a cost. After the election, the winning candidate implements her preferred policy. The utility function of citizen is thus given by:
Where is the policy implemented by the winning candidate? If nobody runs for office, then a policy is selected uniformly at random from the interval [0, 1].
This problem set contains one problem in four parts. You can download a PDF of the Week 6 Problem Set assignment or view the assignment online below. Please note that you will need to submit your answers online.