a solution concept for majority rule in dynamic settings we define and explore the notion of a dynamic condorcet winner dcw which extends the notion of a condorcet winner to dynamic settings we show that for every dcw every member of a large class of dynamic majoritarian games has an equivalent equilibrium and that other equilibria are not similarly portable across this class of games existence of dcws is guaranteed when members of the community are sufficiently patient we characterize sustainable and unsustainable outcomes study the effects of changes in the discount factor investigate efficiency properties and explore the potential for achieving renegotiation proof outcomes we apply this solution concept to a standard one dimensional choice problem wherein agents have single peaked preferences as well as to one involving the division of a fixed aggregate payoff

fairness and efficiency in a subjective claims problem abstract in a subjective claims problem agents have conflicting perceptions on what constitutes a fair division of a jointly produced cake in a large scale experimental study involving a three agent subjective claims problem we compare the performance of four mechanisms which use agents reports on fair shares as input and yield a division of the cake or less as output the mechanisms differ with respect to the desirable properties they possess and they are compared in terms of efficiency and perceived allocative and procedural fairness successful in terms of both fairness and efficiency are two mechanisms that explicitly ask for an assessment of the partners fair shares and that do not induce agents to exaggerate their assessment of the own fair share one of the two successful mechanisms does not ask for an assessment of the own fair share while the other punishes overly selfish own claims

endogenous federal grants and crowd out of state government spending theory and evidence from the federal highway aid program contrary to simple theoretical predictions existing evidence suggests that federal grants do not crowd out state government spending a legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods this correlation has likely biased existing work against measuring crowd out to correct for such endogeneity the model motivates instruments based on the political power of state congressional delegations exploiting this exogenous variation in grants the instrumental variables estimator reports crowd out that is statistically and economically significant this endogeneity may explain the flypaper effect a nonequivalence between grant receipts and private income jel d70 h40 h77

bargaining and value we present and analyze a model of noncooperative bargaining among n participants applied to situations describable as games in coalitional form this leads to a unified solution theory for such games that has as special cases the shapley value in the transferable utility tu case the nash bargaining solution in the pure bargaining case and the recently introduced maschler owen consistent value in the general nontransferable utility ntu case moreover we show that any variation in a certain class of our bargaining procedure which generates the shapley value in the tu setup must yield the consistent value in the general ntu setup

the power of the proposal maker in a model of endogenous agenda formation in a distributive setting this study examines a voting procedure for which agenda formation is endogenous it is found not surprisingly that agenda formation is another avenue for strategic manipulation of the voting process and provides the member to first take the floor an asymmetric advantage what is surprising is the degree of this advantage we find that the initial proposal maker earns a share of the fixed resource exceeding 1 for an majority rule and this is regardless of the number of members the voting rule is found to be an effective instrument in at least partially offsetting the power of the proposal maker while maintaining the stability of the voting process

improved methods for predicting property prices in hazard prone dynamic markets property prices are affected by changing market conditions incomes and preferences of people price trends in natural hazard zones may shift significantly and abruptly after a disaster signalling structural systemic changes in property markets it challenges accurate market assessments of property prices and capital at risk after major disasters a rigorous prediction of property prices in this case should ideally be done based only on the most recent sales which are likely to form a rather small dataset hedonic analysis has been long used to understand how various factors contribute to the housing price formation yet the robustness of its assessment is undermined when the analysis needs to be performed on relatively small samples the purpose of this study is to suggest a model that can be widely applicable and quickly calibrated in a changing environment we systematically study four statistical models starting from a typical standard hedonic function and gradually changing its functional specification by reducing the hedonic analysis to some basic property characteristics and applying kriging to control for neighbourhood effects across different sample sizes we find that the latter performs consistently better in the out of sample predictions than other traditional price prediction methods we present the specific improvements to the traditional spatial hedonic model that enhance the model s prediction accuracy the improved model can be used to monitor price changes in risk prone areas accounting for changes in flood risk and at the same time controlling for autonomous market responses to flood risk

parochial interests and the centralized provision of local public goods evidence from congressional voting on transportation projects abstract local public goods financed from a national tax base provide concentrated benefits to recipient jurisdictions but disperse costs creating incentives for legislators to increase own district spending but to restrain aggregate spending due to the associated tax costs while these common pool incentives underpin a variety of theoretical analyses which tend to predict inefficiencies in the allocation of public goods there is little direct evidence that individual legislators respond to such incentives to test for reactions to such incentives this paper analyzes 1998 congressional votes over transportation project funding the empirical results provide evidence that legislators respond to common pool incentives the probability of supporting the projects is increasing in own district spending and decreasing in the tax burden associated with aggregate spending having found that legislators do respond to such incentives i use the parameter estimates to calculate the efficient level of public goods which suggest over spending in aggregate especially in politically powerful districts and large associated deadweight loss

pollution control through price incentives the role of rent seeking costs in monopoly markets abstract we consider the effect of rent seeking costs on the design of an efficient pollution tax earlier work has concluded that a pollution tax levied on an otherwise unregulated monopoly should always be less than the pigouvian rate this study demonstrates that if rent seeking costs are present the appropriate discharge tax for a monopoly firm can equal or exceed the marginal damage from its pollution calculations reveal that under a wide range of conditions the ideal corrective tax for a monopoly firm is very close to the fully internalizing pigouvian tax

endogenous choice of amendment agendas types of voters and experimental evidence a stylized model of three parties choosing an amendment agenda and voting over three policy alternatives is analyzed the analysis yields a classification of five types of voters random sincere strategic risk averse and eus expected utility sophisticated proposed by enelow j polit 43 1062 1089 1981 laboratory experiments suggest that the choice of agendas can be partially explained by the sincere voting model 26 of voters and strategic voting model 47 of voters even when players preferences are common knowledge risk aversion may explain choices of up to 56 of the voters finally the eus voting model explains up to 73 of the observed voting behavior

incomplete social contracts there is a long normative social contract tradition that attempts to characterize ex post income inequalities that are agreeable to all behind a veil of ignorance this paper takes a similar normative approach to characterize social decision making procedures it is shown that quite generally some form of majority voting is preferred to unanimity behind a veil of ignorance whenever society faces deadweight costs in making compensating transfers deviations from unanimity or ex post pareto optimality are ex ante efficient to the extent that they economize on costly compensating transfers put another way the optimal decision rule trades off the benefits of minority protection and those from greater flexibility jel h11 g33 g34 d63 p16 p48

environmental preservation and majority decisions in this paper we bring together the quasi option value literature with a majority rule community decision making scheme it is shown that the quasi option value is positive for a majority of voters if there exists a median voter who is dictatorial however the quasi option value can be negative for a majority or all community members given the standard assumptions of the literature for which the quasi option value for a single decision maker would always be positive but in some cases this leads to majority decisions in favor of the irreversible development of natural resources when future information is taken into account

legislative representation bargaining power and the distribution of federal funds evidence from the us congress this article investigates the relationship between representation in legislatures and the geographic distribution of federal funds in a legislative bargaining model we demonstrate that funds are concentrated in high representation areas and two channels underlie this result the proposal power channel reflects the role of representation in committee assignments and the vote cost channel reflects the role of representation in coalition formation in our empirical analysis we find that small states relative to large states receive more funding in the us senate relative to the house we also find empirical support for the two channels underlying this relationship throughout the history of federations and international organisations a key consti tutional design question involves how jurisdictions of different sizes are represented in legislative bodies and how their votes will ultimately be weighted large jurisdictions typically argue for delegation sizes or voting weights that are roughly proportional to population whereas small jurisdictions typically argue for an equal number of delegates or votes for each jurisdiction this conflict over representation is presumably driven at least in part by a belief that increased representation strengthens bargaining power in the battle over the geographic distribution of funds authorised by these legislative bodies in this article i analyse the relationship between legislative representation bar gaining power and the geographic distribution of federal funds from both a theoretical and empirical perspective in addition to investigating the existence of a relationship between representation and federal funds i also explore the underlying mechanisms that is i ask which political institutions such as agenda control provided to commit tees and the formation of coalitions under majority rule shape the bargaining power of jurisdictions in central legislatures and thus facilitate the relationship between repre sentation and the distribution of federal spending to provide a framework for analysing these issues i begin by developing a simple theoretical model of a central legislature that determines the crossjurisdiction distri bution of local public goods which are financed by a national tax base both delegation sizes and population are variable allowing me to consider a variety of institutional arrangements for jurisdictional representation legislators represent local interests and given the common pool problem associated with concentrated benefits and dis persed tax costs attempt to increase ownjurisdiction spending but to restrain spending elsewhere the model follows a recent literature on legislative bargaining in which a proposer must secure a majority of votes in order to pass legislation and due to the

human capital committee power and legislative outcomes this paper presents a model in which legislators use informational asymmetries to engage in rent seeking behavior previous work in the informational and distributive traditions could not explain deviations from the median preference without reference to committee power integration of these forces demonstrated that legislative outcomes need not correspond to the median preference regardless of the extent to which committee power is present in a legislature while deviations from the median preference are consistent with committee power recent empirical evidence suggests that observed deviations in congress are in fact caused by human capital differentials rather than committee power

competition among institutions abstract economic theory offers two different approaches to the analysis of group formation and the role of institutions general equilibrium approach explores the influence of the economic environment on formation of coalitions game theory explores the influence of institutional rules on equilibrium outcomes we introduce an integrative approach an institution s policy depends on its membership while its membership depends on the policies of all the institutions we present three distinct mathematical approaches to these models highlighting the algebraic nature of the question of existence of equilibrium our apparatus cover many economic and political environments including cases with multiple dimensions and multiple institutions journal of economic literature classification numbers c62 d50 d71 d72 h11 h40 r13 r53

proposal power and majority rule in multilateral bargaining with costly recognition this paper studies a sequential bargaining model in which agents expend efforts to be the proposer in equilibrium agents effort choices are influenced by the prize and cost effects the endogenous prize is 9

formal versus informal legislative bargaining we study how the formality of a bargaining procedure affects its outcome we compare a formal baron ferejohn bargaining procedure to an informal procedure where players make and accept proposals in continuous time both constitute non cooperative games corresponding to the same bargaining problem a three player median voter setting with an external disagreement point this allows us to study formality in the presence and absence of a core and provides a natural explanation for the effects of preference polarization our results show that polarization hurts the median player and that formality matters the median player is significantly better off under informal bargaining

the effect of state education finance reform on total local resources abstract both the federal government and the states use intergovernmental grants to try to change the composition of local spending across different programs as well as the distribution of resources across localities many states are now under court order to use state education grants to reduce local disparities in education spending while a substantial body of literature suggests that these court orders increase the level and progressivity of state education spending there is little evidence on their broader effects on the total resources available not just for schools in low income districts but for other programs across all localities we find that states finance the required increase in education spending in part by reducing their aid to localities for other programs particularly for wealthier areas thus while court ordered school finance equalizations do increase total state aid to localities for education they do so at the expense of drawing state intergovernmental aid away from programs like public welfare health hospitals and general services these findings provide insight into the effectiveness of using earmarked funds to achieve redistribution

estimating the value of proposal power this paper investigates the role of proposal power in the allocation of transportation projects across u s congressional districts in 1991 and 1998 the evidence supports the key qualitative prediction of legislative bargaining models members with proposal power those sitting on the transportation authorization committee secure more project spending for their districts than do other representatives support for the quantitative restrictions on the value of proposal power is more mixed i then empirically address several alternative models of legislative behavior including partisan models informational roles for committees models with appropriations committees and theories of committees as preference outliers

distributional consequences of political representation abstract we investigate both theoretically and empirically the effect of the geographic concentration of representatives on the geographic distribution of fiscal transfers our theoretical model predicts that more representatives residing in a geographic area leads to higher government funds to that area our empirical analysis uses the fact that in germany due to germany s electoral rules in state elections the number of representatives varies across electoral districts controlling for various socio economic demographic and political variables and using a variety of estimation methods we find that districts with a greater number of representatives receive more government funds