Optimal strategies in political elections

Abstract

In the Majoritarian Parliamentary System, the government has a constitutional right to call an early election. This right provides the government a control to achieve its objective to remain in power for as long as possible. We model the early election problem mathematically using opinion polls data as a stochastic process to proxy the government's probability of re-election. These data measure the difference in popularity between the government and the opposition. We fit a mean reverting Stochastic Differential Equation to describe the behaviour of the process and consider the possibility for the government to use other control tools, which are termed `boosts' to induce shocks to the opinion polls by making timely policy announcements or economic actions. These actions improve the government's popularity and have some impact upon the early-election exercise boundary.