buying negative agenda control in the u s house we explore the foundations of the legislative party cartel as theorized by cox and mccubbins 1993 2005 to determine how majority party moderates who suffer net policy losses from the majority leadership s use of negative agenda control are kept from defecting from the cartel arrangement first we identify formally the group of majority party members who are net policy losers we find that those members occupying the initial 30 of the space within the majority party blockout zone that space closest to the floor median are hurt on a pure policy basis by the cartel arrangement second we find that members in this 30 zone are rewarded disproportionately by majority party leaders relative to members in other intervals on the same side of the floor median via side payments in the form of campaign contributions in addition majority party members within the 30 zone receive side payments commensurate with their particular policy loss

coalition and party formation in a legislative voting game we examine a legislative voting game where decisions are being made over both ideological and distributive dimensions and legislators preferences are separable over the two dimensions in equilibrium legislators prefer to make proposals for the two dimensions together rather than offering sequential proposals on the two dimensions separately the equilibria exhibit interaction between the ideological and distributive dimensions and in any equilibrium there is a positive probability that a proposal is made and approved which excludes the median legislator as defined over the ideological dimension in contrast with a game where no distributive decision is being made moreover in any stationary equilibrium there is more than one ideological decision that has a positive probability of being proposed and approved we show that legislators can gain from forming political parties and consider examples where predictions can be made about the composition of parties we discuss the impact of political parties on the outcome

existence of stationary bargaining equilibria abstract this paper addresses the question of existence of stationary markov perfect equilibria in a class of dynamic games that includes many known bargaining models and models of coalition formation general sufficient conditions for existence of equilibria are currently lacking in a number of interesting environments e g models with non convexities consumption lower bounds or an evolving state variable the main result establishes existence of equilibrium under compactness and continuity conditions without the structure of convexity or strict comprehensiveness used in the extant literature the proof requires a precise selection of voting equilibria following different proposals using a generalization of fatou s lemma

oligarchy democracy inequality and growth abstract this paper analyses the dynamics of inequality democratization and economic development in a political economy model of growth where education is both the engine of growth and a determinant of political participation in a context with imperfect capital markets we investigate the incentives for an educated oligarchy to subsidize the poor s education and to initiate a democratic transition we characterize the equilibrium patterns of political institutions income distribution and growth as a function of the initial income and inequalities in particular we identify circumstances under which the elite promotes the endogenous emergence of a middle class for purely political economy reasons a simple linear infinite horizon framework is then presented in this setting we discuss the importance of historical dependence for long run social stratification and redistribution

on the efficiency of equilibria in a legislative bargaining model with particularistic and collective goods this study analyzes the efficiency of equilibria in a multilateral bargaining game in which a legislature divides its budget among collective and particularistic goods in order to disentangle the causes of inefficiency we extend the model of volden and wiseman am polit sci rev 101 79 92 2007 by considering quasi linear utility functions and consensus requirements ranging from simple majority to unanimity although unanimous agreements can be reached under weaker consensus requirements we show that pareto inefficiency is associated with non unanimous consent we also study how i the endogenous selection of the legislature s size or ii a sequential choice of collective and particularistic spending eliminates or attenuates the inefficiency problem

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

predictability and power in legislative bargaining the rules and procedures of legislatures often provide legislators with information bearing on the identities of upcoming proposers for a broad class of legislative bargaining games we establish that markovian equilibria necessarily deliver all economic surplus to the first proposer whenever the information structure permits the legislators to rule out some minimum number of proposers one round in advance this result holds regardless of the recognition process and even if players vary in patience and risk aversion it raises the possibility that procedures adopted in the interest of transparency may contribute to the imbalance of political power

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

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

political selection and persistence of bad governments we study dynamic selection of governments under different political institutions with a special focus on institutional flexibility a government consists of a subset of the individuals in the society the competence level of the government in office determines collective utilities e g by determining the amount and quality of public goods and each individual derives additional utility from being part of the government e g rents from holding office we characterize the dynamic evolution of governments and determine the structure of stable governments which arise and persist in equilibrium in our model perfect democracy where current members of the government do not have veto power over changes in governments always leads to the emergence of the most competent government however any deviation from perfect democracy to any regime with incumbency veto power destroys this result there is always at least one other less competent government that is also stable and can persist forever and even the least competent government can persist forever in office we also show that there is a nonmonotonic relationship between the degree of incumbency veto power and the quality of government in contrast in the presence of stochastic shocks or changes in the environment a regime with less incumbency veto power has greater flexibility and greater probability that high competence governments will come to power this result suggests that a particular advantage of democratic regimes with a limited number of veto players may be their greater adaptability to changes rather than their performance under given conditions finally we show that royalty like dictatorships may be more successful than junta like dictatorships because in these regimes veto players are less afraid of change

a theory of political transitions we develop a theory of political transitions inspired by the experiences of western europe and latin america nondemocratic societies are controlled by a rich elite the initially disenfranchised poor can contest power by threatening revolution especially when the opportunity cost is low for example during recessions the threat of revolution may force the elite to democratize democracy may not consolidate because it is redistributive and so gives the elite an incentive to mount a coup highly unequal societies are less likely to consolidate democracy and may end up oscillating between regimes and suffer substantial fiscal volatility

dynamic legislative policy making abstract we prove existence of stationary markov perfect equilibria in an infinite horizon model of legislative policy making in which the policy outcome in one period determines the status quo for the next we allow for a multidimensional policy space and arbitrary smooth stage utilities and we assume preferences and the status quo are subject to arbitrarily small shocks we prove that equilibrium continuation values are differentiable and that proposal strategies are continuous almost everywhere we establish upper hemicontinuity of the equilibrium correspondence and we provide weak conditions under which each equilibrium of our model determines an aperiodic transition probability over policies we establish a convergence theorem giving conditions under which the invariant distributions generated by stationary equilibria must be close to the core in a canonical spatial model finally we extend the analysis to sequential move stochastic games and to a version of the model in which the proposer and voting rule are determined by play of a finite perfect information game

elections coalitions and legislative outcomes predictions of electoral behavior in a multiparty setting should be a function of the voters beliefs about how parties will perform following an election similarly party behavior in a legislature should be a function of electoral promises and rewards we develop a multistage game theoretic model of three party competition under proportional representation the final policy outcome of the game is generated by a noncooperative bargaining game between the parties in the elected legislature this game is essentially defined by the vote shares each party receives in the general election and the parties electoral policy positions at the electoral stage parties and voters are strategic in that they take account of the legislative implications of any electoral outcome we solve for equilibrium electoral positions by the parties and final policy outcomes

political losers as a barrier to economic development per capita income in many sub saharan african countries such as chad and niger is less than 1 30th of that of the united states most economists and social scientists suspect that this is in part due to institutional failures that stop these societies from adopting the best technologies a particularly interesting historical example comes from the diffusion of railways in the 19th century while railways are regarded as a key technology driving the industrial revolution there were large lags in their diffusion for example in 1850 the united states had 14 518 km of track britain 9 797 km and germany 5 856 km in the russian and hapsburg empires there were just 501 km and 1 357 kim respectively all data from brian r mitchell 1993 why do societies as in this example fail to adopt the best available technologies one answer is that existing powerful interest groups block the introduction of new technologies in order to protect their economic rents and societies are able to make technological advances only if they can defeat such groups economic monopolies may be one example a monopolist might wish to block the introduction of a new technology by a rival that will capture the market this idea which we call the economic losers hypothesis was discussed by simon kuznets 1968 developed at length by joel mokyr 1990 in the context of technology adoption and formalized by per krusell and jose victor rios rull 1996 and stephen l parente and edward c prescott 1997 related ideas are widely discussed in the literature on international trade policy with many formal models e g gene m grossman and elhanan helpman 1994 there are problems with this story however first despite the intuitive appeal of the idea there are relatively few instances where major economic change was blocked by economic losers mokyr 1990 emphasizes the attempts of many skilled artisans to block the introduction of new machines the most famous example is the luddites skilled weavers who were thrown out of work by mechanization interestingly however many of these groups including the luddites were ultimately unable to block economic progress equally important the economic losers hypothesis relies on the presumption that certain groups have the political power to block innovation but if so why not use this power to simply tax the gains generated by the introduction of the new technology this might be because there are limits on the nature of fiscal instruments though it seems plausible that groups with sufficient political power to block innovation would be able subsequently to lobby effectively for redistribution a more important reason however may be that the introduction of new technology and economic change more generally may simultaneously affect the distribution of political power we argue that the effect of economic change on political power is a key factor in determining whether technological advances and beneficial economic changes will be blocked in other words we propose a political loser hypothesis we argue that it is groups whose political power not economic rents is eroded who will block technological advances if agents are economic losers but have no political power they cannot impede technological progress if they have and maintain political power i e are not political losers then they have no incentive to block progress it is therefore agents who have t discussant gene grossman princeton university

power brokers middlemen in legislative bargaining abstract we study a model of decentralized legislative bargaining over public decisions with transfers we establish the emergence of middlemen in legislative bargaining as a robust equilibrium phenomenon we show that legislative intermediation can impact policy outcomes and can be inefficient to fulfill this role the middleman s policy preferences and bargaining position must be such that its role of intermediary is credible but the political middleman must also directly benefit from policy change the results highlight fundamental differences between the role of intermediaries in politics and exchange economies

a bargaining model of collective choice we present a general model of legislative bargaining in which the status quo is an arbitrary point in a multidimensional policy space in contrast to other bargaining models the status quo is not assumed to be bad and delay may be pareto efficient we prove existence of stationary equilibria the possibility of equilibrium delay depends on four factors risk aversion of the legislators the dimensionality of the policy space the voting rule and the possibility of transfers across districts if legislators are risk averse if there is more than one policy dimension and if voting is by majority rule for example then delay will almost never occur in one dimension delay is possible if and only if the status quo lies in the core of the voting rule and then it is the only possible outcome this core selection result yields a game theoretic foundation for the well known median voter theorem our comparative statics analysis yield two noteworthy insights i if the status quo is close to the core t hen equilibrium policy outcomes will also be close to the core a moderate status quo produces moderate policy outcomes and ii if legislators are patient then equilibrium proposals will be close to the core legislative patience leads to policy moderation

has new business creation in russia come to a halt abstract successful transformation of centrally planned economies requires not just the privatization of the existing firms but also the formation of new ones new entrants serve to correct for the central planners neglect of such sectors as services and consumer goods and their bias in favor of large firms indeed central european economies have been experiencing a rapid rate of new business creation as measured by the change in the number of small firms russia also experienced a short period of explosive growth in the number of new business however since 1994 net new business formation has stagnated this paper looks into the possible causes of this phenomenon official data on the change in the number of small businesses which serve as a proxy for net new business formation arouse justified suspicion because of the frequent changes in the definition of small enterprise like everywhere in the world some russian registered firms do not become operational and some firms that have ceased operations do not legally disband if the share of these dead souls in the total count of small firms changes over time and official statistics does not adjust its count accordingly the data may show the opposite of the actual processes this paper analyzes russian data collection procedures and other evidence and concludes that stagnation in the new business formation is a real phenomenon rather than a statistical artifact the difficulty in finding out the causes of stagnation is that empirical studies focus on the existing businesses and miss those that should have been born but were not the problems faced by the incumbents and frustrated entrants may well be different the likely causes of the end of new business creation are the increased tax and regulatory burden combined with plunder by the numerous tax and regulatory authorities other possible explanations involve the incumbents use of the authorities and or racketeers to erect barriers against new entrants

party government and the cohesive power of public plunder we argue that party government in the u s house of representatives rests on two pillars the pursuit of policy goals and the disbursement of particularistic benefits existing theories of party government argue that the majority party in the house is often successful in biasing policy outcomes in its favor in the process it creates policy losers among its own members who nevertheless support their party on procedural votes we posit that the majority party creates an incentive for even the policy losers to support a procedural coalition through judicious distribution of particularistic benefits that compensates policy losers at a rate commensurate with the policy losses that they suffer we evaluate our theory empirically using the concept of roll rates in conjunction with federal domestic outlays data for the period 1983 96 we find that within the majority party policy losers are favored in the distribution of pork barrel spending throughout this period

inefficiency in legislative policymaking a dynamic analysis this paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining the policy space incorporates both productive and distributive public spending and distortionary taxation the productive spending is investing in a public good that benefits all citizens e g national defense and the distributive spending is district specific transfers e g pork barrel spending investment in the public good creates a dynamic linkage across policymaking periods the analysis explores the dynamics of legislative policy choices focusing on the efficiency of the steady state level of

mechanism design how to implement social goals existing economic institutions the theorist wants to explain or forecast the economic or social outcomes that these institutions generate but in mechanism design theory the direction of inquiry is reversed we begin by identifying our desired outcome or social goal we then ask whether or not an appropriate institution mecha nism could be designed to attain that goal if the answer is yes then we want to know what form that mechanism might take in this paper i offer a brief introduction to the part of mechanism design called implementation theory which given a social goal characterizes when we can design a mechanism whose predicted

uniqueness of stationary equilibrium payoffs in coalitional bargaining we study a model of sequential bargaining in which in each period before an agreement is reached the proposer s identity is randomly determined the proposer suggests a division of a pie of size one each other agent either approves or rejects the proposal and the proposal is implemented if the set of approving agents is a winning coalition for the proposer the theory of the fixed point index is used to show that stationary equilibrium expected payoffs of this coalitional bargaining game are unique this generalizes eraslan 34 insofar as a there are no restrictions on the structure of sets of winning coalitions b different proposers may have different sets of winning coalitions c there may be a positive probability that no proposer is selected

uniqueness of stationary equilibria in bargaining one dimensional policies under super majority rules article history we consider negotiations selecting one dimensional policies individuals have instanta neous preferences represented by continuous concave and single peaked utility functions and they are impatient decisions arise from a bargaining game with random proposers and super majority approval ranging from the simple majority up to unanimity we provide sufficient conditions that guarantee the existence of a unique stationary subgame perfect equilibrium and we provide its explicit characterization the uniqueness of the equilibrium permits an analysis of the set of pareto optimal voting rules for symmetric distributions of peaks and uniform recognition probabilities unanimity is the unanimously preferred ma jority rule

demand commitment in legislative bargaining morelli 1999 provides a model of government formation in which the parties make payoff demands and the order of moves is chosen by the leading party morelli s main proposition states that the ex post distribution of payoffs inside the coalition that forms is proportional to the distribution of relative ex ante bargaining power we provide a counterexample in which the leading party is able to obtain the entire payoff furthermore there are coalitions for which proportional payoff division does not occur for any order of moves

static and dynamic underinvestment an experimental investigation in this paper we design a stylized version of an environment with public goods dynamic linkages and legislative bargaining our theoretical framework studies the provision of a durable public good as a modified version of battaglini et al 2012 we develop an experimental design that allows us to disentangle inefficiencies that would result in a one shot world static inefficiencies from extra inefficiencies that emerge in an environment in which decisions in the present affect the future dynamic inefficiencies we solve for efficiency and also characterize the bargaining equilibrium a symmetric stationary subgame perfect equilibrium which is the most common concept used in applied work the experimental results indicate that subjects do react to dynamic linkages and as such we find evidence of both static and dynamic inefficiencies in fact the quantitative predictions of the model with respect to the share of dynamic inefficiencies are closest to the data when dynamic linkages are high to the extent that behavior is different from what is predicted by the model a systematic pattern emerges namely the use of strategic cooperation whereby subjects increase the efficiency of period one proposals by selectively punishing in period two subjects who did not propose efficient allocations

choosing how to choose self stable majority rules and constitutions constitutional arrangements affect the decisions made by a society we study how this effect leads to preferences of citizens over constitutions and ultimately how this has a feedback that determines which constitutions can survive in a given society constitutions are stylized here to consist of a voting rule for ordinary business and possibly a different voting rule for making changes to the constitution we define an equilibrium notion for constitutions called self stability whereby under the rules of a self stable constitution the society would not vote to change the constitution we argue that only self stable constitutions will endure we prove that self stable constitutions always exist but that most constitutions even very prominent ones may not be self stable for some societies we show that constitutions where the voting rule used to amend the constitution is the same as the voting rule used for ordinary business are dangerously simplistic and there are many societies for which no such constitution is self stable we conclude with a characterization of the set of self stable constitutions that use majority rule for ordinary business

persistence of power repeated multilateral bargaining with endogenous agenda setting authority abstract we extend a simple repeated multilateral bargaining model to allow successful agenda setters to hold on to power as long as they maintain the support of a majority of other committee members theoretically and experimentally we compare this endogenous power environment with a standard random power environment in which agenda setters are appointed randomly each period although the theoretical analysis predicts that the two environments are outcome equivalent the experimental analysis shows substantial differences in behavior and outcomes across the games the endogenous power environment results in the formation of more stable coalitions less equitable budget allocations the persistence of power across periods and higher long run inequality than the random power environment we present evidence that the stationary equilibrium refinements traditionally used in the literature fail to predict behavior in either game

legislative bargaining with heterogeneous disagreement values theory and experiments we study a legislative bargaining game in which failure to agree in a given round may result in a breakdown of negotiations in that case each player receives an exogenous disagreement value we characterize the set of stationary subgame perfect equilibria under all q majority rules under unanimity rule equilibrium payoffs are strictly increasing in disagreement values under all less than unanimity rules expected payoffs are either decreasing or first increasing and then decreasing in disagreement values we conduct experiments involving three players using majority and unanimity rule finding qualitative support for several but not all of our main predictions having a high disagreement value is indeed an advantage under unanimity under majority the player with the highest disagreement value is more likely to be excluded but this does not consistently result in a lower average payoff

legislative bargaining under weighted voting organizations often distribute resources through weighted voting we analyze this setting using a non cooperative bargaining game based on the baron ferejohn 1989 model unlike analyses derived from cooperative game theory we find that each voter s expected payoff is proportional to her voting weight an exception occurs when many high weight voters exist as low weight voters may expect disproportionately high payoffs due to proposal power the model also predicts that ex post the coalition formateur the party chosen to form a coalition will receive a disproportionately high payoff using data from coalition governments from 1946 to 2001 we find strong evidence ofsuch formateur effects

bargaining foundations of the median voter theorem abstract we give a game theoretic foundation for the median voter theorem in a one dimensional bargaining model based on baron and ferejohn s d baron j ferejohn bargaining in legislatures amer polit sci rev 83 1989 1181 1206 model of distributive politics we prove that as the agents become arbitrarily patient the set of proposals that can be passed in any pure strategy subgame perfect equilibrium collapses to the median voter s ideal point while we leave the possibility of some delay we prove that the agents equilibrium continuation payoffs converge to the utility from the median so that delay if it occurs is inconsequential we do not impose stationarity or any other refinements our result counters intuition based on the folk theorem for repeated games and it contrasts with the known result for the distributive bargaining model that as agents become patient any division of the dollar can be supported as a subgame perfect equilibrium outcome

persistence of power elites and institutions we construct a model to study the implications of changes in political insti tutions for economic institutions a change in political institutions alters the distribution of de jure political power but creates incentives for investments in de facto political power to partially or even fully offset change in de jure power the model can imply a pattern of captured democracy whereby a democratic regime may survive but choose economic institutions favoring an elite the model provides conditions under which economic or policy outcomes will be invariant to changes in political institutions and economic institutions them selves will persist over time jel d02 d72 the domination of an organized minority over the unor ganized majority is inevitable the power of any minority is irresistible as against each single individual in the majority who stands alone before the totality of the organized minor ity at the same time the minority is organized for the very reason that it is a minority

estimating the effects of unions on wage inequality in a panel data model with comparative advantage and nonrandom selection this article considers the estimation of the structure of wages in union and nonunion sectors it proposes an estimator that extends standard panel data techniques to the case in which the return to the permanent component of the error term is differently rewarded in the two sectors the econometric model is used to estimate the effect of unions on both the level and the variance of wages in canada the findings indicate that unions increase the average wage of workers and compress the returns to observable measures of skill and to a time invariant unobservable measure of skill

comparative politics and public finance we propose a model with micropolitical foundations to contrast different political regimes compared to a parliamentary regime the institutions of a presidential congressional regime produce fewer incentives for legislative cohesion but more separation of powers these differences are reflected in the size and composition of government spending a parliamentary regime has redistribution toward a majority less underprovision of public goods and more rents to politicians a presidential congressional regime has redistribution toward powerful minorities more underprovision of public goods but less rents to politicians the size of government is smaller under a presidential regime this last prediction is consistent with cross country data

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

a dynamic theory of public spending taxation and debt this paper presents a dynamic political economy theory of public spending taxation and debt policy choices are made by a legislature consisting of representatives elected by geographically defined districts the legislature can raise revenues via a distortionary income tax and by borrowing these revenues can be used tofinance a national public good and district specific transfers interpreted as pork barrel spending the value of the public good is stochastic reflecting shocks such as wars or natural disasters in equilibrium policy making cycles between two distinct regimes business as usual in which legislators bargain over the allocation of pork and responsible policy making in which policies maximize the collective good transitions between the two regimes are brought about by shocks in the value of the public good in the long run equilibrium tax rates are too high and too volatile public good provision is too low and debt levels are too high in some environments a balanced budget requirement can improve citizen welfare

do juntas lead to personal rule january 2009although almost half of the world s population lives under nondemocratic regimes thequestions of how policy decisions are made and how power changes hands in nondemocra cies have received relatively little attention in the political economy literature a popularview forcefully articulated by gordon tullock 1987 is that because there are no stronginstitutions ensuring consensus and regulating the election and succession of leaders non democratic regimes rapidly degenerate into personal rule where a single dictator dominatesevery aspect of decision making tullock writes empirically the junta characteristicallyshrinks to one man p 144 and continues to explain this as the result of dynamic in teractions among the members of the junta he suggests that there will typically be anaccumulation of power by one of the junta members if this upstart member succeeds hebecomes the sole ruler if he fails he is eliminated by the other members of the junta this process continues until one member is standing tullock thus concludes it can beseen that this process would tend over time to lead the junta into becoming just one manthrough the gradual exclusion of individuals who had failed in plotting or the success of anindividual who had not p 145 tullock s account like that of many others implicitly recognizes that politics in non democratic and weakly institutionalized societies should be conceptualized as one of thedynamic coalition formations there are no rules that ensure orderly transitions of powerand no checks against some members of the ruling coalition eliminating or sidelining others however formal models of dynamic coalition formation in nondemocratic societies have notbeen developed until recently in this paper we draw on our work on dynamic coalition formation daron acemoglu georgy egorov and konstantin sonin 2008a and investigate tullock s conjecture formally 1

the monopoly of violence evidence from colombia many states in latin america africa and asia lack the monopoly of violence even though this was identified by max weber as the foundation of the state and thus the capacity to govern effectively in this paper we develop a new perspective on the establishment of the monopoly of violence we build a model to explain the incentive of central states to eliminate nonstate armed actors paramilitaries in a democracy the model is premised on the idea that paramilitaries may choose to and can influence elections since paramilitaries have preferences over policies this reduces the incentives of the politicians they favor to eliminate them we then investigate these ideas using data from colombia between 1991 and 2006 we first present regression and case study evidence supporting our postulate that paramilitary groups can have significant effects on elections for the legislature and the executive next we show that the evidence is also broadly consistent with the implication of the model that paramilitaries tend to persist to the extent that they deliver votes to candidates for the executive whose preferences are close to theirs and that this effect is larger in areas where the presidential candidate would have otherwise not done as well finally we use roll call votes to illustrate a possible quid pro quo between the executive and paramilitaries in colombia language en

political careers or career politicians two main career paths are prevalent among politicians in modern democracies there are career politicians i e politicians who work in the political sector until retirement and political careers i e there are politicians who leave politics before retirement and work in the private sector in this paper we propose a dynamic equilibrium model of the careers of politicians in a political economy with a private sector and a political sector where individuals are heterogeneous with respect to their market ability as well as their political skills we characterize the conditions under which the two career paths emerge in equilibrium and establish a number of comparative statics results with respect to the quality of politicians and their careers

interpreting the wage gap estimate from selectivity correction techniques using micro data abstract the selectivity correction techniques lead to two conceptually different wage gap estimates including the selectivity correction factors in the computation of the wage gap leads to a conditional estimate whereas excluding them leads to a potential estimate

coalition formation in non democracies we study the formation of a ruling coalition in non democratic societies where institutions do not enable political commitments each individual is endowed with a level of political power the ruling coalition consists of a subset of the individuals in the society and decides the distribution of resources a ruling coalition needs to contain enough powerful members to win against any alternative coalition that may challenge it and it needs to be self enforcing in the sense that none of its subcoalitions should be able to secede and become the new ruling coalition we present both an axiomatic approach that captures these notions and determines a generically unique ruling coalition and the analysis of a dynamic game of coalition formation that encompasses these ideas we establish that the subgame perfect equilibria of the coalition formation game coincide with the set of ruling coalitions resulting from the axiomatic approach a key insight of our analysis is that a coalition is made self enforcing by the failure of its winning subcoalitions to be self enforcing this is most simply illustrated by the following example with majority rule two person coalitions are generically not self enforcing and consequently three person coalitions are self enforcing unless one player is disproportionately powerful we also characterize the structure of ruling coalitions for example we determine the conditions under which ruling coalitions are robust to small changes in the distribution of power and when they are fragile we also show that when the distribution of power across individuals is relatively equal and there is majoritarian voting only certain sizes of coalitions e g with majority rule coalitions of size 1 3 7 15 etc can be the ruling coalition copyright 2008 wiley blackwell

party formation in single issue politics we study the implications of economies of party size in a model of party formation we show that when the policy space is one dimensional candidates form at most two parties this result does not depend on the magnitude of the economies of party size or sensitively on the nature of the individuals preferences it does depend on our assumptions that the policy space is one dimensional and that uncertainty is absent we study how modifications of these assumptions affect our conclusions

canadian union nonunion wage differentials using extensive canadian longitudinal data from the years 1969 71 the authors estimate union nonunion wage differentials of 12 14 percent for 1969 and 13 16 percent for 1970 these estimates are not adjusted for selectivity because three different tests to identify selectivity yield no evidence of selectivity bias the authors argue that although testing for selectivity is often essential selectivity adjustments have resulted in greatly inflated estimates of union nonunion wage differentials in some studies and should therefore be used with caution

barriers to investment in polarized societies i present a tractable dynamic model of political economy where disagreements about the composition of public spending result in implementation of short sighted policies the relative price of investment to consumption is excessively large in equilibrium due to over taxation investment rates are too low which slows down growth along the transition in the long run this results in output consumption and welfare being inefficiently low the larger is the degree of polarization the greater is the inefficiency political stability mitigates the effects of polarization by making the incumbent internalize the dynamic inefficiencies introduced by the choice of growth retarding policies

on the choice of incentives in firms abstract simple models of individual and group incentives under uncertainty are compared and comparative performance is shown to depend upon various exogenous parameters the incentive effects of profit sharing will thus vary with organizational and other characteristics that may be difficult to observe and attempts to quantify productivity effects that neglect selection bias are likely to be misspecified significant selection effects are found in previously used firm level data and productivity effects of existing profit sharing are found to be much larger than potential effects in firms without sharing arrangements this throws doubt on policies to encourage sharing in isolation

why did the west extend the franchise democracy inequality and growth in historical perspective during the nineteenth century most western societies extended voting rights a decision that led to unprecedented redistributive programs we argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution political transition rather than redistribution under existing political institutions occurs because current transfers do not ensure future transfers while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution our theory also offers a novel explanation for the kuznets curve in many western economies during this period with the fall in inequality following redistribution due to democratization i introduction the nineteenth century was a period of fundamental political reform and unprecedented changes in taxation and redistribution britain for example was transformed from an oligarchy run by an elite to a democracy the franchise was extended in 1832 and then again in 1867 and 1884 transferring voting rights to portions of the society with no previous political representation the decades after the political reforms witnessed radical social reforms increased taxation and the extension of education to the masses moreover as noted by kuznets inequality which was previously increasing started to decline during this period the gini coefficient for income inequality in england and wales had risen from 0 400 in 1823 to 0 627 in 1871 but fell to 0 443 in 1901 two key factors in the reduction in inequality were the increase in the proportion of skilled workers williamson 1985 and the redistribution of income toward the poorer segments of the society for example taxes rose from 8 12 percent of national product in 1867 to 18 8 percent by 1927 and the progressivity of the tax system increased substantially see lindert 1989

economists interest in collective decision after world war ii a history this paper tracks economists rising yet elusive and unstable interest in collective decision mechanism after world war ii we replace their examination of voting procedures and social welfare functions in the 1940s and 1950s in the context of their growing involvement with policy making confronted with natural scientists and mccathythes accusations of ideological bias positive studies emphasizing that collective decisions mechanisms were unstable and inefficient and normative impossibilities economists largely relied on the idea the policy ends they worked with reflected a social consensus as the latter crumbled in the 1960s growing disagreement erupted on how to identify and aggregate those individual values which economists believed should guide applied work in particular in cost benefit analysis the 1970s and 1980s brought new approaches to collective decision arrow s impossibility was solved by expanding the informational basis it was showed that true preferences could be revealed by making decision costly and experimentalists and market designers enabled these mechanisms to be tested in the lab before being sold to those public bodies looking for decision procedures that emulated markets in this new regime the focus paradoxically shifted to coordination revelation and efficiency and those economists studying collective decision processes were marginalized

institutions and growth in limited access societies we build a dynamic political economy model with a two class society workers and the elite in which the elite formation the innovation rate and fiscal policy are endogenous the model generates a mapping between institutions and patterns of growth consistent with empirical evidence ex ante when facing constraints in choosing institutions the elite may delegate policy control to some of its members even though such delegation exacerbates the conflict within the elite and causes policy failures committing to such institutional arrangements prevents more harmful outcomes such as rapid entry and subsequent deterioration of the elite s economic and political power

endogenous parties in an assembly in this article i show how members of an assembly form voting blocs strategically to coordinate their votes and affect the policy outcome chosen by the assembly in a repeated voting game permanent voting blocs form in equilibrium these permanent voting blocs act as endogenous political parties that exercise party discipline in a stylized assembly i prove that the equilibrium parties must be two small polarized voting blocs one at each side of the ideological divide

voting weights and formateur advantages in the formation of coalition governments over the last two decades a large and important literature has emerged that uses game theoretic models of bargaining to study legislative coalitions to test key predictions of these models we examine the composition of coalition governments from 1946 and 2001 these predictions are almost always expressed in terms of parties minimal integer voting weights we calculate such weights for all parliamentary parties in addition we develop a statistical model that nests the predictions of many of these models of the distribution of posts we find that for parties that join but did not form the government there is a linear relationship between their share of the voting weight in parliament and their share of cabinet posts the party that forms the government the formateur receives a substantial bonus relative to its voting weight the latter finding is more consistent with proposal based bargaining models of coalition formation and suggests that parties gain disproportionate power not because of their size but because of their proposal power

legislative bargaining with reconsideration we present a dynamic model of legislative bargaining with an endogenously evolving default policy and a persistent agenda setter policy making proceeds until the agenda setter can no longer pass a new policy to replace an approved bill we prove existence and necessary conditions of pure strategy stationary equilibria for any finite policy space any number of players and any preference profile in equilibrium the value of proposal power is limited compared to the case that disallows reconsideration as voters are induced to protect each other s benefits to maintain their future bargaining positions the agenda setter in turn would prefer to limit his ability to reconsider the lack of commitment due to the possibility of reconsideration however enhances policy efficiency

democratization or repression abstract regimes controlled by a rich elite often collapse and make way for democracy amidst widespread social unrest such regime changes are often followed by redistribution to the poor at the expense of the former elite we argue that the reason why the elite may have to resort to full scale democratization despite its apparent costs to themselves may be that lesser concessions would be viewed as a sign a weakness and spur further unrest and more radical demands the elite may therefore be forced to choose between repression and the most generous concession a transition to full democracy

dynamics and stability of constitutions coalitions and clubs a central feature of dynamic collective decision making is that the rules that govern the procedures for future decision making and the distribution of political power across players are determined by current decisions for example current constitutional change must take into account how the new constitution may pave the way for further changes in laws and regulations we develop a general framework for the analysis of this class of dynamic problems under relatively natural acyclicity assumptions we provide a complete characterization of dynamically stable states as functions of the initial state and determine conditions for their uniqueness we show how this framework can be applied in political economy coalition formation and the analysis of the dynamics of clubs the explicit characterization we provide highlights two intuitive features of dynamic collective decision making 1 a social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society 2 efficiency enhancing changes are often resisted because of further social changes that they will engender

a noncooperative theory of legislative coalitions this noncooperative theory is based on a model that incorporates an institutional structure that reflects the sequential process of agenda formation and voting in a legislature that has the task of allocating particularistic benefits among legislative districts the theory is intended to identify the incentives for the formation of proposal coordinating coalitions as a function of characteristics of the political system and the rules that govern agenda formation coalition proposals allocate all the benefits to their districts and whenever the coalition has discipline or controls the chair it will be of minimal winning size when proposals are governed by a closed rule when coalition discipline is absent and the chair is neutral the coalition will be comprised of approximately 70 of the legislature a legislative rule that allows amendments may result in larger coalitions coalition composition is also considered

the stability of hedonic coalition structures we consider the partitioning of a society into coalitions in purely hedonic settings i e where each player s payoff is completely determined by the identity of other members of her coalition we first discuss how hedonic and nonhedonic settings differ and some sufficient conditions for the existence of core stable coalition partitions in hedonic settings we then focus on a weaker stability condition individual stability where no player can benefit from moving to another coalition while not hurting the members of that new coalition we show that if coalitions can be ordered according to some characteristic over which players have single peaked preferences or where players have symmetric and additively separable preferences then there exists an individually stable coalition partition examples show that without these conditions individually stable coalition partitions may not exist we also discuss some other stability concepts and the incompatibility of stability with other normative properties journal of economic literature classification numbers c71 a14 d20

the swing voter s curse the authors analyze two candidate elections in which some voters are uncertain about the realization of a state variable that affects the utility of all voters they demonstrate the existence of a swing voter s curse less informed indifferent voters strictly prefer to abstain rather than vote for either candidate even when voting is costless the swing voter s curse leads to the equilibrium result that a substantial fraction of the electorate will abstain even though all abstainers strictly prefer voting for one candidate over voting for another copyright 1996 by american economic association

the advantageous nature of risk aversion in a three player bargaining game where acceptance of a proposal requires a simple majority abstract in a three player bargaining game in which acceptance of a proposed allocation requires only the approval of a simple majority it is shown that the most least risk averse player receives the highest lowest expected share when the preferences of the players are not too diverse

a simple model of inefficient institutions this paper develops a simple model of economic and political institutions that lead to poor aggregate economic performance in the model economy groups with political power the elite choose policies to increase their income and to directly or indirectly transfer resources from the rest of society to themselves the resulting equilibrium is generally inefficient because of three distinct mechanisms 1 revenue extraction 2 factor price manipulation and 3 political consolidation in particular the elite may pursue inefficient policies to extract revenue from other groups they may do so to reduce the demand for factors coming from other groups in the economy thus indirectly benefiting from changes in factor prices finally they may try to impoverish other groups competing for political power the elite s preferences over inefficient policies translate into inefficient economic institutions the notable exception to this general picture emerges when long term investments are important thus creating a commitment holdup problem whereby equilibrium taxes and regulations are worse than the elite would like them to be from an ex ante point of view in this case economic institutions that provide additional security of property rights to other groups can be useful

generalized social marginal welfare weights for optimal tax theory this paper proposes to evaluate tax reforms by aggregating money metric losses and gains of different individuals using generalized social marginal welfare weights optimum tax formulas take the same form as standard welfarist tax formulas by simply substitut ing standard marginal social welfare weights with those generalized weights weights directly capture society s concerns for fairness without being necessarily tied to individual utilities suitable weights can help reconcile discrepancies between the welfarist approach and actual tax practice as well as unify in an operational way the most prominent alternatives to utilitarianism such as libertarianism equality of opportunity or poverty alleviation jel d60 d63 h21 h23 i38