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it doesn't, really. it rewards pragmatic representatives that appeal to the center and compete for campaign contributions. ideology plays no part except as post-hoc justification.
I disagree. Moderates are not insignificant, but moderates often become disinterested in both of the two extremist parties. Although negative campaigns portraying the other party's extremism can counteract this. But I think extremism is more often rewarded in practice. For example, the rallying Fundamentalist Christian demographic in 2000, and the radically extremist Tea Party in 2010.