Equilibria in campaign spending games: Theory and data

We present a formal game-theoretic model to explain the simultaneity problem that makes it difficult to obtain unbiased estimated of the effects of both incumbent and challenger spending in U.S. House elections. the model predicts a particular form of correlation between the expected closenesss of the races and should be progressively more severs in the range of safe races that are empirically observed. This is confirmed by comparing simple OLS regression of races that are expected to be close with races that are not, using House incumbent races spanning two decades.