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on Positive Political Economics |
| By: | Casey, Katherine (Stanford University) |
| Abstract: | This paper explores how the quality of information available to voters influences the choices they make in the polling booth and in turn affects the strategies of political parties competing for their support. To do so, the paper builds a model of redistributive politics under asymmetric information and then tests the resulting propositions with data from recent elections in Sierra Leone. Using the Lindbeck and Weibull (1987) model as a foundation, I incorporate a new determinant of voting choice--candidate quality--which is only imperfectly observed by voters. I show that voters with better information about candidates are more likely to cross ethnic party lines to support a high quality candidate. Furthermore, since information encourages voters to consider characteristics like candidate charisma that are difficult for parties to observe, it makes party forecasting of expected vote shares more uncertain. Such electoral uncertainty in turn induces parties to spread their resources more evenly across jurisdictions. Two institutional attributes of the empirical setting--ethnicity-based politics and decentralization--enable direct tests of these informational propositions as well as a novel identification strategy for the classic swing voter hypothesis. My results suggest that information could break the low accountability equilibrium in which citizens cast their votes blindly along partisan lines, creating little incentive for political parties to invest in candidate quality or provide resources to areas outside the most tightly contested jurisdictions. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:2099&r=pol |
| By: | Schipper, Burkhard C. (University CA, Davis); Woo, Hee Yeul (University CA, Davis) |
| Abstract: | In modern elections, ideologically motivated candidates with a wealth of information about individual voters and sophisticated campaign strategies are faced by voters who lack awareness of some political issues and are uncertain about the exact political positions of candidates. This is the context in which we analyze electoral competition between two ideologically fixed candidates and a finite set of voters. Each political issue corresponds to a dimension of a multidimensional policy space in which candidates' and voters' most preferred policy points are located. Candidates can target messages to subsets of voters. A candidate's message consists of a subset of issues and some information on her political position in the subspace spanned by this subset of issues. The information provided can be vague, it can be even silent on some issues, but candidates are not allowed to bluntly lie about their ideology. Every voter votes for the candidate she expects to be closest to her but takes into account only the subspace spanned by the issues that come up during the campaign. We show that any prudent rationalizable election outcome is the same as if voters have full awareness of issues and complete information of policy points, both in parliamentary and presidential elections. We show by examples that these results depend on the strength of electoral competition, the ability to target information to voters, and the political reasoning abilities of voters. |
| JEL: | C72 D71 P16 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:ucdeco:2012-04&r=pol |
| By: | Spenkuch, Jörg L. |
| Abstract: | Whether individuals vote strategically is one of the most important questions at the intersection of economics and political science. Exploiting a flaw in the German electoral system by which a party may gain seats by receiving fewer votes, this paper documents patterns of strategic voting in a large, real world election. During the 2005 elections to the Bundestag, the sudden death of a right-wing candidate necessitated a by-election in one electoral district. Knowing the results in all other districts and aware of the paradoxical incentives in place, a substantial fraction of the electorate reacted tactically and either voted for a party other than their most preferred one, or abstained. As a result, the Christian Democratic Union won an additional mandate, extending its narrow lead over the Social Democrats. |
| Keywords: | voting; strategic voting; manipulation of elections |
| JEL: | D7 D72 P16 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38416&r=pol |
| By: | Boffa, F.; Piolatto, A.; Ponzetto, G.A.M. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: This paper studies fiscal federalism when voter information varies across regions. We develop a model of political agency with heterogeneously informed voters. Rentseeking politicians provide public goods to win the votes of the informed. As a result, rent extraction is lower in regions with higher information. In equilibrium, electoral discipline has decreasing returns. Thus, political centralization e¢ ciently reduces aggregate rent extraction. The model predicts that a region's benefits from centralization are decreasing in its residents' information. We test this prediction using panel data on pollutant emissions across U.S. states. The 1970 Clean Air Act centralized environ- mental policy at the federal level. In line with our theory, we find that centralization induced a differential decrease in pollution for uninformed relative to informed states. |
| Keywords: | Political centralization;Government accountability;Imperfect information;Interregional heterogeneity;Elections;Environmental policy;Air pollution . |
| JEL: | D72 D82 H73 H77 Q58 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2012033&r=pol |
| By: | Egil Matsen, Gisle J. Natvik and Ragnar Torvik (Department of Economics, Norwegian University of Science and Technology) |
| Abstract: | We aim to explain petro populism–the excessive use of oil revenues to buy political support. To reap the full gains of natural resource income politicians need to remain in office over time. Hence, even a purely rent-seeking incumbent who only cares about his own welfare, will want to provide voters with goods and services if it promotes his probability of remaining in office. While this incentive benefits citizens under the rule of rent-seekers, it also has the adverse effect of motivating benevolent policymakers to short-term overprovision of goods and services. In equilibrium politicians of all types indulge in excessive resource extraction, while voters reward policies they realize cannot be sustained over time. Our model explains how resource wealth may generate political competition that reduces the tenability of equilibrium policies. |
| Date: | 2012–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:nst:samfok:12812&r=pol |
| By: | Russo, Giuseppe; Salsano, Francesco |
| Abstract: | We study the effect of electoral systems on openness to immigration. According to the literature, in our model plurality systems induce a rent-seeking policymaker to get re-election through locally provided public goods rather than through transfers, whereas the opposite occurs under proportional representation. In both systems policymakers can use immigration to enlarge the tax base and retrieve increased rents after compensating the decisive majority. However, this mechanism is more effective when the increased tax base does not flow to non-voting immigrants through transfers. Therefore, plurality electoral systems generate more openness to immigration. We find support for this result on a cross-section of 34 OECD countries. In addition, we show that mass immigration \ might incentivize policymakers to get re-election throug public goods rather than transfers also in proportional electoral systems. |
| Keywords: | electoral systems; rent extraction; immigration |
| JEL: | F22 H40 D78 D72 H00 |
| Date: | 2012–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:38497&r=pol |
| By: | Sambit Bhattacharyya; Roland Hodler |
| Abstract: | Democracy and media freedom have been suggested as useful tools in the fight against political corruption, but so far their interplay in this fight has received scant attention. We present a game theoretic model which predicts that the corruption-reducing effect of democracy becomes stronger as media freedom increases. Using panel data covering the period 1980-2008 and 126 countries, we find empirical support for this prediction. Our main results hold when we control for the effects of income, time varying common shocks, regional fixed effects and various additional covariates. The complementarity between democracy and media freedom in the fight against corruption is also supported by Indian state level data. |
| Keywords: | Corruption; political institutions; democracy; media freedom |
| JEL: | D72 D73 H11 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:csa:wpaper:2012-02&r=pol |
| By: | Filistrucchi, L.; Antonielli, M. (Tilburg University, Tilburg Law and Economics Center) |
| Abstract: | Abstract: We analyse a newspaper market where two editors first choose the political position of their newspaper, then set cover prices and advertising tariffs. We build on the work of Gabszewicz, Laussel and Sonnac (2001, 2002), whose model of competition among newspaper publishers we take as the stage game of an infinitely repeated game, and investigate the incentives to collude and the properties of the collusive agreements in terms of welfare and pluralism. We analyse and compare two forms of collusion: in the first, publishers cooperatively select both prices and political position; in the second, publishers cooperatively select prices only. We show that collusion on prices reinforces the tendency towards a Pensée Unique discussed in Gabszewicz, Laussel and Sonnac (2001), while collusion on both prices and the political line would tend to mitigate it. Our findings question the rationale for Joint Operating Agreements among US newspapers, which allow publishers to cooperate in setting cover prices and advertising tariffs but not the editorial line. We also show that, whatever the form of collusion, incentives to collude first increase, then decrease as advertising revenues per reader increase. |
| Keywords: | collusion;newspapers;two-sided markets;indirect network effects;pluralism;spatial competition. |
| JEL: | L41 L82 D43 K21 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:2012014&r=pol |
| By: | Barth, Erling (Institute for Social Research, Oslo); Moene, Karl Ove (University of Oslo) |
| Abstract: | The complementarity between wage setting and welfare spending can explain how almost equally rich countries differ in economic and social equality among their citizens. More wage equality increases the welfare generosity via political competition in elections. A more generous welfare state fuels wage equality via an empowerment of weak groups in the labor market. Together the two effects generate a cumulative process that adds up to a social multiplier explaining how equality multiplies. Using data on 18 OECD countries over the period 1976-2002 (determined by the availability of the generosity index of welfare spending) we test the main predictions of the model and identify a sizeable magnitude of the equality multiplier. We obtain additional support by using spending data to extend the panel up to 2007, and by applying another data set for the US over the period 1945-2001. |
| Keywords: | welfare state, wage inequality |
| JEL: | H53 I31 J31 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6494&r=pol |
| By: | Blais, Andre (Université de Montréal); Laslier, Jean-François (Ecole Polytechnique); Sauger, Nicolas (Sciences Po Paris); Van Der Straeten, Karine (Toulouse School of Economics) |
| Abstract: | The paper proposes a way to measure mechanical and psychological effects of majority runoff versus plurality electoral systems in candidate elections. Building on a series of laboratory experiments, we evaluate these effects with respect to the probability of electing a Condorcet winner candidate. In our experiment, the runoff system very slightly favours the Condorcet winner candidate, but this total effect is small. We show that this is the case because the mechanical and psychological effects tend to cancel each other out. Compared to plurality, the mechanical effect of runoffs is to systematically advantage the Condorcet winner candidate, as usually assumed; but our study detects an opposite psychological effect, to the disadvantage of this candidate. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25769&r=pol |
| By: | Blais, Andre (Université de Montréal); Laslier, Jean-François (Ecole Polytechnique); Sauger, Nicolas (Sciences Po Paris); Van Der Straeten, Karine (Toulouse School of Economics) |
| Abstract: | The paper proposes a way to measure mechanical and psychological effects of majority runoff versus plurality electoral systems in candidate elections. Building on a series of laboratory experiments, we evaluate these effects with respect to the probability of electing a Condorcet winner candidate. In our experiment, the runoff system very slightly favours the Condorcet winner candidate, but this total effect is small. We show that this is the case because the mechanical and psychological effects tend to cancel each other out. Compared to plurality, the mechanical effect of runoffs is to systematically advantage the Condorcet winner candidate, as usually assumed; but our study detects an opposite psychological effect, to the disadvantage of this candidate. |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:25770&r=pol |
| By: | Firpo, Sergio (São Paulo School of Economics); Pieri, Renan (São Paulo School of Economics); Souza, André Portela (São Paulo School of Economics) |
| Abstract: | School accountability systems that establish the adoption of incentives for teachers and school managers usually impact positively students’ performance. However, in many circumstances, school accountability systems may face institutional restrictions to establish rewards and sanctions to administrators. In that aspect, the Brazilian accountability system is an interesting example: Most of primary public schools are run by municipal officials and federal government cannot enforce the adoption of incentives at local level. However, because mayors of Brazilian municipalities are the ultimate responsible for public elementary education we provide evidence that in 2008 local election, just some months after the publication of the second wave of a new evaluation of public schools run every two years by federal government, mayors became electorally accountable for not improving school quality. The results show that, on average, one point increase in a 0-10 scale index from 2005 to 2007 increased by around 5 percentage points the probability of re-election. This effect is even greater in localities with lower per capita income and those where the fraction of children at school age is larger. Therefore, electoral accountability may play a complementary role in school accountability systems that had not yet been fully exploited by education and political economics and political science literatures. |
| Keywords: | public education, school accountability, electoral accountability, mayoral re-election races |
| JEL: | H11 H41 H52 H72 I21 I28 |
| Date: | 2012–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6524&r=pol |
| By: | Migheli, Matteo; Ortona, Guido; Ponzano, Ferruccio |
| Abstract: | According to commonsense wisdom, under proportionality a small centrist party enjoys an excess of power with reference to its share of seats (or votes) due to the possibility of blackmailing the larger ones. This hypothesis has been challenged on a theoretical ground, with some empirical support. In this paper we use simulation to test its validity. Our results strongly provide evidence that the hypothesis is actually wrong. What occurs is a transfer of power from the peryphery of the political spectrum towards the center, buth the major gainers are the large centrist parties and not the small ones. |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:uca:ucapdv:167&r=pol |
| By: | Le Breton, Michel (TSE); Montero, Maria; Zaporozhets, Vera (TSE) |
| Abstract: | We analyze and evaluate the di¤erent decision rules describing the Council of Ministers of the EU starting from 1958 up to now. Most of the existing studies use the Banzhaf index (for binary voting) or the Shapley-Shubik index (for distributive politics). We argue in favor of the nucleolus as a power measure in distributive situations and an alternative to the Shapley-Shubik index. We then calculate the nucleolus and compare the results of our calculations with the conventional measures. In the second part, we analyze the power of the European citizens as measured by the nucleolus under the egalitarian criterion proposed by Felsenthal and Machover (1998), and characterize the first best situation. Based on these results we propose a methodology for the de sign of the optimal (fair) decision rules. We perform the optimization exercise for the earlier stages of the EU within a restricted domain of voting rules, and conclude that Germany should receive more than the other three large countries under the optimal voting rule. |
| JEL: | C71 C72 C78 D63 D72 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25808&r=pol |
| By: | Le Breton, Michel (IDEI-TSE); Montero, Maria; Zaporozhets, Vera (TSE) |
| Abstract: | We analyze and evaluate the di¤erent decision rules describing the Council of Ministers of the EU starting from 1958 up to now. Most of the existing studies use the Banzhaf index (for binary voting) or the Shapley-Shubik index (for distributive politics). We argue in favor of the nucleolus as a power measure in distributive situations and an alternative to the Shapley-Shubik index. We then calculate the nucleolus and compare the results of our calculations with the conventional measures. In the second part, we analyze the power of the European citizens as measured by the nucleolus under the egalitarian criterion proposed by Felsenthal and Machover (1998), and characterize the first best situation. Based on these results we propose a methodology for the de sign of the optimal (fair) decision rules. We perform the optimization exercise for the earlier stages of the EU within a restricted domain of voting rules, and conclude that Germany should receive more than the other three large countries under the optimal voting rule. |
| JEL: | C71 C72 C78 D63 D72 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:25809&r=pol |
| By: | Le Breton, Michel; Sudhölter, Peter; Zaporozhets, Vera |
| Abstract: | In this paper, we analyze the equilibrium of a sequential game-theoretical model of lobbying, due to Groseclose and Snyder (1996), describing a legislature that vote over two alternatives, where two opposing lobbies compete by bidding for legislators?votes. In this model, the lobbyist moving ?rst su¤ers from a second mover advantage and will make an o¤er to a panel of legislators only if it deters any credible counter-reaction from his opponent, i.e., if he anticipates to win the battle. This paper departs from the existing literature in assuming that legislators care about the consequence of their votes rather than their votes per se. Our main focus is on the calculation of the smallest budget that the lobby moving ?rst needs to win the game and on the distribution of this budget across the legislators. We study the impact of the key parameters of the game on these two variables and show the connection of this problem with the combinatorics of sets and notions from cooperative game theory. |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:25805&r=pol |
| By: | Bettina Klose (University of Zurich); Dan Kovenock (Economic Science Institute, Chapman University) |
| Abstract: | This article investigates the impact of the distribution of preferences on equilibrium behavior in conflicts that are modeled as all-pay auctions with identity-dependent externalities. In this context, we define centrists and radicals using a willingness-topay criterion that admits preferences more general than a simple ordering on the line. Through a series of examples, we show that substituting the auction contest success function for the lottery contest success function in a conflict may alter the relative expenditures of centrists and radicals in equilibrium. Extremism, characterized by a higher per capita expenditure by radicals than centrists, may persist and lead to a higher aggregate expenditure by radicals, even when they are relatively small in number. Moreover, we show that centrists may in the aggregate expend zero, even if they vastly outnumber radicals. Our results demonstrate the importance of the choice of the institutions of conflict, as modeled by the contest success function, in determining the role of extremism and moderation in economic, political, and social environments. |
| Keywords: | Conflict, All-pay Auction, Identity-dependent Externalities, Radicalism, Extremism, Contest Success Function. |
| JEL: | D72 D74 C72 D44 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:12-10&r=pol |