human fallibility and economic organization doctrines concerning what is a good way to organize a society have influenced human societies more deeply than any other set of doctrines specifically beliefs that one way of organizing production and exchange is better than others have inspired a number of socioeconomic experiments leading to modern capitalist and socialist societies with far reaching implications yet surprisingly the central doctrines though a source of continuing ideological debate have been the subject of only limited scientific enquiry the major proposition the so called langelerner taylor theorem asserting the equivalence between competitive capitalist economies and decentralized socialist economies which make use of the price system made a point in stressing that the issue of the ownership of the means of production might not be central in the comparison of economic systems the theorem however was based on models both of capitalism and of market socialism in which the most important differences between the two systems were suppressed this paper describes a research program attempting to delineate some of the critical differences among alternative forms of economic organization we contend that central to an understanding of these differences is an understanding of differences in the organization of decision making of who gathers what information how it gets communicated and to whom and how decisions get made both concerning what actions to take and who should fill decision making positions this view should be contrasted with the traditional economic paradigm in which decision making plays no role the manager for instance simply looks up in a book of blueprints what the appropriate technique of production is for the given set of factor prices in the conventional paradigm moreover mistakes are never made either in gathering or transmitting information or in making decisions and indeed there are no costs associated with these activities by contrast the view we take here is that to err is human and that different organizational systems differ not only in what kinds of errors individuals make in them but also in how the systems aggregate errors as a result organizations differ systematically in the kinds of errors they make and thus in their overall economic performance organizations also differ in the costs associated with information collection with information communication and processing and with decision making indeed as we discuss below perfect decision making can be achieved by arranging enough decision makers in an appropriate manner no matter how fallible the decision makers are provided their decisions are not purely random or worse what prevents perfect decision making is the cost we refer to the specification of the structure of information gathering communication and decision making as an organization s architecture the objective of our research program has been to construct stylized models of an economic organization within which the consequences of alternative organizational architectures can be examined using these models not only can we compare the performance of particular organizational forms but we can also ask given a particular set of objectives and circumstances what is the optimal structure within tdiscussants david kreps stanford university paul milgrom yale university

optimal democratic mechanisms for taxation and public good provision abstract we study the interdependence of optimal tax and expenditure policies an optimal policy requires that information on preferences is made available we first study this problem from a general mechanism design perspective and show that efficiency is possible only if the individuals who decide on public good provision face an own incentive scheme that differs from the tax system we then study democratic mechanisms with the property that tax payers vote over public goods under such a mechanism efficiency cannot be reached and welfare from public good provision declines as the inequality between rich and poor individuals increases

endogenous competence and a limit to the condorcet jury theorem the seminal contribution known as the condorcet jury theorem observes that under a specific set of conditions an increase in the size of a group tasked with making a binary decision guilty or innocent say leads to an improvement in the group s ability to make the correct choice an assumption that is not properly appreciated in the relevant literature is that the competency of the group members is assumed to be exogenous in numerous applications members of the group make investments to improve the accuracy of their decision making e g pre meeting efforts we consider the collective action problem that arises we show that if individual competence is endogenous then increases in the group size encourages free riding this trades off with the value of information aggregation thus the value of the larger group size is muted extensions illustrate that if committee members are allowed to exit not participate the equilibrium committee size is reduced additionally supermajority voting rules encourage investments and consequently individual competence

could tariffs be pro cyclical abstract conventional wisdom says that tariffs are counter cyclical we analyze the relationship between business cycles and applied mfn tariffs using a disaggregated product level panel dataset covering 72 countries between 2000 and 2011 strikingly and counter to conventional wisdom we find that tariffs are pro cyclical further investigation reveals that this pro cyclicality is driven by the tariff setting behavior of developing countries tariffs are acyclical in developed countries we present evidence that pro cyclical market power drives the pro cyclicality of tariffs in developing countries providing further evidence of the importance of terms of trade motivations in explaining trade policy

compulsory versus voluntary voting an experimental study abstract we report on an experiment comparing compulsory and voluntary voting institutions in a voting game with common preferences rational choice theory predicts sharp differences in voter behavior between these two institutions if voting is compulsory then voters may find it rational to vote insincerely i e against their private information if voting is voluntary so that abstention is allowed then sincere voting in accordance with a voter s private information is always rational while participation may become strategic we find strong support for these theoretical predictions in our experimental data moreover voters adapt their decisions to the voting institution in place in such a way as to make the group decision accuracy differences between the two voting institutions negligible the latter finding may serve to rationalize the co existence of compulsory and voluntary voting institutions in nature

to elect or to appoint bias information and responsiveness of bureaucrats and politicians in this paper we address empirically the trade offs involved in choosing between bureaucrats and politicians in order to do this we map institutions of selection and retention of public officials to the type of public officials they induce we do this by specifying a collective decision making model and exploiting its equilibrium information to obtain estimates of the unobservable types we focus on criminal decisions across us states supreme courts we find that justices that are shielded from voters influence bureaucrats on average i have better information ii are more likely to change their preconceived opinions about a case and iii are more effective make less mistakes than their elected counterparts politicians we evaluate how performance would change if the courts replaced majority rule with unanimity rule

technology diffusion and the rate of technical change the way in which the process of technical change is formulated at the macroeconomic level implies generally speaking immediate diffusion or adoption of new technologies whether primarily disembodied in nature accounting for any shift in the production function as in the early technology index formulations or embodied in new investment as in the subsequent vintage growth models technical progress will be identified with advances in inventiveness or best practice technologies at first this might well seem the most appropriate way to separate out the contribution of the technology production factor from the other production factors from a straightforward economic point of view though advances in technology or best practice productivity levels are only relevant to the extent that they have been translated in actual achieved productivity levels the issue is a well known one in most empirical research on the measurement of the contribution of technical change to economic growth and has received much attention in the recent productivity slowdown debate denison i 979 griliches i980 nordhaus i980 and i 98i in particular there it was generally agreed that other technology factors including a slowdown in the rate of the spread of technology to use kendrick s i 98i term were more important than the actual decline in r d expenditure in contributing to the overall slowdown in productivity the importance of the diffusion of innovation rather than the mere occurrence of innovations is of course the major factor underlying most of the microeconomic diffusion literature the fundamental reasons for delay in adopting the so called retardation factors have been found to relate both to uncertainty and lack of information about the new technology and the often proprietary nature of the new technology since griliches i957 and mansfield s i96i seminal papers most of this literature has focused on the theoretical arguments underlying the traditional s shaped epidemic diffusion curve in more recent research particularly the mechanical static nature of these diffusion models has been questioned and various alternative diffusion models suggested including dynamic supply models metcalfe 1981 i982 stoneman i983 in which both the economic characteristics of the innovation and its diffusion environment have been made endogenous to the diffusion process these latter models in particular allow for an interpretation of the diffusion of technology in a broader macroeconomic growth and structural change perspective

international diffusion of technology industrial development and technological leapfrogging abstract this paper anlyzes how the international diffusion of technology fits historically within the overall process of spurts of industrialization and what lessons can be learned by the present industrializing countries in the context of the microelectronics revolution a review of some of the most important contributions to the technology diffusion literature and their relevance to structural theories of industrial development of economic growth is presented in the first part of the paper a discussion of international diffusion especially historical changes in technological leaderships follows the paper concludes with a consideration of the implications of diffusion analysis for industrializing countries and argues that the developing countries potential for technological leapfrogging into microelectronics has never been higher

robustly coalition proof incentive mechanisms for public good provision are voting mechanisms and vice versa we study the relation between mechanism design and voting in public good provision if incentive mechanisms must satisfy conditions of robust coalition proofness as well as robust incentive compatibility the participants contributions to public good provision can only depend on the level of the public good that is provided and that level can only depend on the population shares of people favouring one level over another for a public good that comes as a single indivisible unit the outcome depends on whether or not the share of votes in favour of provision exceeds a specified threshold with more provision levels for the public good more complicated mechanisms can be used but they still involve the counting of votes rather than any measurement of the participants willingness to pay the article thus provides a foundation for the use of voting mechanisms

technological learning in singapore a test case of leapfrogging some technology analysts have suggested that developing countries dcs might be able to leapfrog earlier technological paradigms and catch up in the field of electronics this paper provides a partial test case of the leapfrogging argument using evidence from singapore s electronics industry it shows that technology was accumulated through a gradual process of learning rather than by leapfrogging indeed corporate learning was incremental painstaking long term and cumulative also in contrast with the leapfrogging hypothesis firms tended to enter electronics at the mature phase of the product cycle rather than the early stage furthermore much of the technology accumulated by singapore s electronics industry was pre electronic in character involving crafts mechanical and precision engineering electro mechanical interfacing and basic manufacturing skills rather than the software computer and r d skills usually associated with electronics the evidence from singapore suggests that industri

black hole tariffs and endogenous policy theory political economy in general equilibrium preface acknowledgments list of results 1 a preview of the results 2 endogenous policy theory a diagrammatic approach part i endogenous policy theory with specific factors the theory of industry tariffs in partial equilibrium 3 the probabilistic voting model of political efficiency and powerless politicians 4 endogenous lobbying theory and the contribution specialization theorem 5 endogenous tariff theory 6 the power function model of endogenous industry lobbying 7 three simple tests of the stolper samuelson theorem 8 the invisible foot and the waste of nations lawyers as negative externalities part ii endogenous policy theory in general equilibrium a long run theory of national tariff levels 9 the 2 x 2 x 2 x 2 model of endogenous redistribution theory 10 a prisoner s dilemma theory of endogenous protection the leontief model 11 the compensation effect and the multiple equilibrium trap 12 increasing returns to politics and factor endowments economic development and brazilian vitality versus the indian disease 13 endogenous protection in the united states 1900 88 14 a cobb douglas model 15 black hole tariffs 16 the endowment effect cross national evidence on endogenous tariffs part ii postscript 17 the senile industry argument for protection 18 optimal obfuscation and the theory of the second worst the politically efficient policy mathematical appendices references author index subject index

organizations space and capital in the development of korea s electronics industry suarez villa l and han p h 1990 organizations space and capital in the development of korea s electronics industry reg studies 25 327 343 this paper analyses the effect of foreign and domestic capital on the organization of production and the spatial distribution of korea s electronics industry an assessment of korea s international advantages and their impact on trade labour employment and foreign capital is followed by factor analyses using data collected through establishment surveys these provide a set of significant organizational dimensions based on a differentiation of capital and regional location where scale is found to be a most important factor in production domestic capital contributes more than foreign capital to the integration of electronics in korea s productive structure but has a lower export emphasis and tends to concentrate more in the primate metropolitan region suarez villa l et han p h 1991 organisations espace et capital dans le developpement de l electroniqu

first impressions matter signalling as a source of policy dynamics we provide the first direct empirical support for the importance of signalling in monetary policy by testing two key predictions from a novel structural model first all policymaker types should become less tough on inflation over time and secondly types that weigh output more should have a more pronounced shift voting data from the bank of england s monetary policy committee strongly support both predictions counterfactual results indicate signalling has a substantial impact on interest rates over the business cycle and improves the committee designer s welfare implications for committee design include allowing regular member turnover and transparency regarding publishing individual votes

information processing and jury decisionmaking abstract we develop a model to explore the information processing function that jury deliberation and its analogues perform the central question we ask is how much better could a jury possibly perform if it optimally used the collective information available to it than if it decides cases by a simple majority vote before any deliberation or information sharing occurs it is shown how the answer depends on a number of considerations including the correlation among jurors observations the jurors assessments of the relative importance of type i and type ii errors compared with society s assessment of those errors and differences in jurors abilities

endogenous protection and retaliation between canada and the united states abstract endogenous protection theory and the theory of retaliation explain movements in tariffs differently using a varma model to test for the presence of granger causality we examine the interrelationships between tariffs and political pressure in the u s and canada

the optimal decision rule for fixed size committees in dichotomous choice situations the general result this paper presents a general pairwise choice framework and derives the optimal decision rule for fixed size committees the main result generalizes a number of earlier results in the subject copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the seven main stylized facts of the mexican economy since trade liberalization and nafta in mexico a remarkably dynamic expansion of exports has been associated with a surprisingly poor overall growth performance moreover this collapse of the export multiplier took place in a context of both massive inflows of foreign direct investment and unrestricted market access to the us the first two items on all developing countries growth agenda today therefore the study of mexico is an ideal scenario within which to assess the impact of the new development model on growth and catching up copyright 2005 oxford university press

information aggregation rationality and the condorcet jury theorem the condorcet jury theorem states that majorities are more likely than any single individual to select the better of two alternatives when there exists uncertainty about which of the two alternatives is in fact preferred most extant proofs of this theorem implicitly make the behavioral assumption that individuals vote sincerely in the collective decision making a seemingly innocuous assumption given that individuals are taken to possess a common preference for selecting the better alternative however in the model analyzed here we find that sincere behavior by all individuals is not rational even when individuals have such a common preference in particular sincere voting does not constitute a nash equilibrium a satisfactory rational choice foundation for the claim that majorities invariably do better than individuals therefore has yet to be derived

tariff behavior in five european countries further evidence abstract temporary movements in the average tariff rate for a country can lead to intertemporal substitution effects a five country model of tariff movements is estimated in a generalized system the tariff formation process follows a random walk for the united kingdom denmark sweden and france which implies that tariff changes can be viewed as permanent in those countries however in switzerland the cumulative impulse responses to a tariff shock imply not only shock persistence but shock magnification

sequential aggregation of verifiable information we introduce the notion of verifiable information into a model of sequential debate among experts who are motivated by career concerns we show that self censorship may hamper the eciency of information agg regation as experts withhold evidence contradicting the conventional wisdom in this case silence is telling and undermines the prevailing view over time if this view is incorrect as a result withholding arguments about the correct state of the world is only a temporary phenomenon and the probability of the correct state of the world being revealed always converges to one as the group of experts becomes large for small groups a simple mechanism the principal can use to improve decisionmaking is to appoint a devil s advocate

women and tariffs testing the gender gap hypothesis in a downs mayer political economy model i am convinced that at least two out of every three women have a grudge against the tariff and a grudge which is all too frequently increased to an indignation by the subtle suggestion on the part of importers and retailers that the tariff adds to the prices of the things they buy it is the women of the household who spend the husband s earnings she has to make them go around and anything which she is told adds to the prices of the things she buys naturally finds little excuse in her mind her attitude regardless of logic is a natural one she doesn t stop to consider the part the tariff may have played in making her husband s earnings what they are or in fact in making them possible at all nor does she stop to consider the relatively minor part the tariff plays in the retail prices of the things she buys she has never seen the tariff law and so she cannot know that with such commodities as coal coffee tea cocoa furs and shoes on the free list some explanation other than the tariff must account for the increased price of these things barbour 1928 1 the notion that women and men hold systematically differing political preferences that there is a gender gap is an old one in american politics even before the national enfranchisement of women in 1920 analysts and commentators attempted to identify issues on which such a gender gap would affect policy outcomes one such issue was the tariff with which we are concerned in this paper the above passage from the january 1928 issue of the tariff review serves as an excellent text for our sermon the logic of the argument is interesting american women prefer a low tariff because a high tariff raises the prices of the things they purchase our paper represents this hypothesis as an extension of the downs 1957 mayer 1984 political economy model and then presents a simple empirical test of the hypothesis we present our analysis in four major parts first we set the stage with a brief discussion of the political economy of the tariff during the period relevant to our analysis 18901934 this discussion provides motivation for the details of the more formal analysis in the following section next we develop the logic of the classic tariff system in the context of the downs mayer model the third section presents the testable proposition that the enfranchisement of women results in a lower equilibrium tariff as an implication of this model in the final section we present our methodology and results i the political economy of the classic tariff system it is not unreasonable to think of the period from the end of the civil war until 1934 as the era of classic tariff politics in the united states during this period the tariff was a significant partisan electoral issue republicans were the party of the protective tariff democrats were opposed to the tariff system while there was regional variation with respect to details at the level of specific products this characterization is quite accurate over the entire period with respect to overall commitment to the tariff system whether one studies political platforms or campaign speeches this split between republicans and democrats remains clear 2 furthermore there seems to be a fairly direct relationship between sectional economic interests and strength of partisan support the industrial northeast was the historical center of republicanism while the rural south and mid west was the center of democrat support another important aspect of the electoral politics during the era of classic tariff politics from the perspective of this paper was the essential one dimensionality of the tariff as an issue 3 that is partisan conflict revolved primarily around support for and opposition to the tariff system not the details of the tariff structure it is important to recall that during this period the tariff was one of the few instruments of industrial policy available to the national government and at least since the end of the civil war the tariff as an electoral issue was explicitly presented by both democrats and republicans as a system of support for american industry

in defense of unanimous jury verdicts mistrials communication and strategic voting the requirement of unanimous jury verdicts in criminal trials is widely believed to reduce the likelihood of convicting the innocent this belief depends largely upon the assumption that jurors will vote nonstrategically based on their impression of the trial evidence recent literature however has questioned this assumption and feddersen and pesendorfer propose a model in which it is never a nash equilibrium for jurors to vote nonstrategically under unanimity rule and equilibrium behavior produces higher probabilities of both convicting the innocent and acquitting the guilty under unanimity rule than under numerous alternatives i extend this work by incorporating two additional features of actual jury procedure the possibility of mistrial and communication among jurors under each circumstance i demonstrate that nonstrategic voting is a nash equilibrium under fairly general conditions and that unanimity performs better than any alternative rule in minimizing probability of trial error and maximizing expected utility

testing the endogeneity of tariff policy in the u s abstract endogenous tariff theory suggests tariffs are created in response to self interested political pressure using a varma model covering the period 1890 1970 in the u s we show that macroeconomic variables which proxy political pressure granger cause the tariff

centralization versus decentralization as a risk return trade off abstract this paper characterizes the choice between centralization and decentralization as a risk return trade off and examines it in a model that integrates ideas from committee decision making and portfolio theories centralization by pooling expertise rarely yields erroneous decisions however when it fails the consequences are global in contrast in a decentralized system erroneous decisions are more frequent but their consequences are locally confined we assess the relative desirability of de centralization in various scenarios with independent versus interdependent risks we further discuss the robustness of the model and the relevance of our results for policymaking

information is important to condorcet jurors group decision making is very significant in a broad variety of settings this paper deals with committees that make binary decisions and addresses the question of whether informative decisions can be assumed within this framework we show that when using the optimal decision rule informative decision making is a nash equilibrium thus we justify the assumption of informative decision making and provide support for the relevance of assumptions such as independent decision making when using the optimal decision rule

outsourcing r d and the pattern of intra metropolitan location the electronics industries of madrid the relationship between intra metropolitan location research and development r d and the outsourcing of production is analysed to determine differences in and the supportive character of intra metropolitan areas for high technology production madrid s electronics industries have shown a remarkable resilience in the face of extensive economic restructuring and the change in trade regimes that has accompanied continental integration much of the strength of the electronics sector may have been due to the metropolitan area s support for outsourcing and the creative specialisation that it facilitated the distribution of manufacturing establishments their local sourcing characteristics industrial district or agglomeration effects and the role of r d are evaluated to determine the intra metropolitan context of production extensive statistical analyses of the relationship between r d and productive performance with various indicators of capital costs revenues and scale are undertaken with estab

information aggregation and strategic abstention in large laboratory elections this paper compares strategic abstention in ad hoc committees versus standing committees ad hoc committees meet only once and then dissolve while standing committees the central finding from this study is that most of the predictions of swing voter curse theory hold up in large elections conducted under controlled laboratory conditions there is significant abstention and significant balancing of partisans by uniformed voters and vote balancing increases with the partisan imbalance elections with no partisan imbalance successfully aggregate information and lead to efficient outcomes consistent with swing voter curse theory this efficiency falls off as partisan imbalance increases but to a significantly greater extent than is predicted in equilibrium it is instructive to compare these findings in large elections with results from the elections reported in battaglini et al 2007 all of the qualitative results are the same concerning the comparative statics balancing and abstention one slight difference is that there was less irrational voting for in the small elections than in the large elections except for the 5 9 m 0 treatment where we observed 20 voting for in the small elections compared with 10 voting for in the large elections these differences were reflected in slightly different efficiency results between small and large elections with the comparisons mirroring the differences in voting for more irrational voting results in lower e ciency we conclude that this scaled up study successfully replicates the initial swing voter s curse experiment reported in battaglini et al 2007 obtaining very similar findings in laboratory committees that are three times the size of those in the original study the one caveat is that we found evidence of a slight increase in irrational nonequilibrium behavior voting for in the larger elections whether this trend would continue as election size is further scaled up is an open question a swing voter s curse environment

the consequences of endogenizing information for the performance of a sequential decision procedure we analyse the implications of endogenizing information collection and reputational concerns for the performance of a sequential decision structure in this model two agents decide in a sequence whether to implement a public project the cost of gathering information is private we derive two results first endogenizing information replaces the herding problem with a free rider problem second endogenizing information aggravates the distortionary effect of reputational concerns

the condorcet jury theorem free speech and correlated votes one of the more optimistic if obscure propositions about democracy is condorcet s jury theorem cjt the theorem establishes that under certain conditions a majority of a group with limited information about a pair of alternatives is more likely to choose the better alternative than any one member of the group the theorem thus provides a mathematical basis for majority rule voting and potentially gives an important clue to our understanding of the strength of democratic government yet cjt makes two overly restrictive assumptions it assumes that individuals vote independently and that they share a common goal clearly the assumptions preclude any application of the theorem to democratic politics not surprisingly black 1963 163 ruled that the theorem offers truly an unpromising start recently interest in the theorem was revived by miller 1986 who permits voters to have conflicting goals and by grofman and feld 1988 who link it with rousseau s general will miller 1986 and grofman and feld 1988 however retain the assumption of independence in this paper i generalize cjt for correlated votes and offer an analytical basis for free speech moreover i apply the generalized theorem to organization theory who should a chief executive choose as advisers the main results of the paper are summarized for large groups condorcet s result would hold under fairly general conditions for small groups the conditions are severe finally under reasonable assumptions p the probability that a majority selects the

testing tariff endogeneity in japan a comparison of pre and post war periods abstract this paper tests an endogenous tariff model for japan 1890 1970 using a vector autoregression var i find that tariff changes are endogenous in the post war period rather than being designed to promote economic activity this suggests that tariffs respond to macroeconomic disturbances

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

delegation ratification and u s trade policy why divided government causes lower tariffs recent research on executive legislative relations concludes that divided government causes higher tariffs and inhibits international cooperation i find that divided government leads to lower u s

public protests and policy making technological advances and the development of social media have made petitions public protests and other form of spontaneous activism increasingly common tools for individuals to influence decision makers to study these phenomena in this article i present a theory of petitions and public protests that explores their limits as mechanisms to aggregate information the key assumption is that valuable information is dispersed among citizens through petitions and protests citizens can signal their private information to the policy maker who can then choose to use it or not i first show that if citizens individual signals are not sufficiently precise information aggregation is impossible no matter how large is the population of informed citizens even if the conflict with the policy maker is small i then characterize the conditions on conflict and the signal structure that guarantee information aggregation when these conditions are satisfied i show that full information aggregation is possible as the population grows to infinity when they are not satisfied i show that information aggregation may still be possible if social media are available

the march of an economic idea protectionism isn t counter cyclic anymore conventional wisdom holds that protectionism is counter cyclic tariffs quotas and the like grow during recessions while that may have been a valid description of the data before the first world war it is now inaccurate since the second world war protectionism has not been counter cyclic tariffs and non tariff barriers simply do not rise systematically during downturns i document this new stylised fact with a panel of data covering over 180 countries and 40 years using over a dozen measures of protectionism and six of business cycles i test and reject a number of potential reasons why protectionism is no longer counter cyclic a diagnosis of exclusion leads me to believe that modern economics may well be responsible for the decline in protectionism s cyclic behaviour economists are more united in their disdain for protectionism than virtually any other concept this in turn leaves one optimistic that the level of protectionism will continue to decline along with its cyclicality andrew k rose

elections with privately informed parties and voters this paper studies a situation in which parties are betterinformed than voters about the optimal policies for voters weshow that voters are able to infer the parties information byobserving their electoral positions even if parties have policypreferences which differ substantially from the median voter s unlike previous work that reach opposite conclusions we assumethat voters have some private information of their own if theinformation available to voters is biased parties attempts toinfluence voters beliefs will result in less than fullconvergence even if parties know with certainty the optimalpolicy for the median voter

voting in large committees with disesteem payoffs a state of the art model abstract we consider a committee of experts that decides to approve or reject an innovation on behalf of society in addition to a payoff linked to the correctness of the committee s decision each expert receives disesteem payoffs if he she votes in favor of an ill fated innovation or votes against an innovation that proves to be beneficial we find that the predictions of the model are sensitive to the signal technology in the standard condorcet framework experts signals are i i d conditional on the state of the world implying that the state of the world is approximated with arbitrary precision by a sufficiently large number of signals under this assumption any combination of disesteem payoffs leads to acceptance with too high a probability however if this assumption is relaxed depending on the relative size of the disesteem payoffs the committee may accept or reject the innovation with too high a probability

the french system of innovation in the oil industry some lessons about the role of public policies and sectoral patterns of technological change in innovation networking abstract the central issue in this paper is to show the importance of public policies and sectoral patterns of technological change for institutional interaction in national systems of innovation nsi from the illustrative case study of french oil industry this case is a relevant example of the french style of public policy more well known as colbertism in the oil industry colbertism has demonstrated a greater ability to overcome some of its main challenges related to a weaker diffusion propensity and to a excessive concentration of r d funds in some strategic sectors the study of this industry demonstrates that sectoral patterns of technological change are very important to explain institutional interaction differences in the degree of appropriability between up and downstream of the oil industry had a great influence in this interaction and in public policies effectiveness however the technological diffusion success was not only due to some favorable technological factor but also to the nature of decision making which was the outcome of a cooperative process

explaining divergence in catching up in pharma between india and brazil using the nsi framework since the mid twentieth century the national objective of india and brazil has been to develop industrial capabilities in essential sectors such as pharmaceuticals at the outset they shared some common features a considerable period of lax intellectual property rights regimes a large internal market and a reasonably strong cadre of scientists and engineers however over sixty years india has had much more success in building indigenous capabilities in pharmaceuticals than brazil at least to date why in exploring the answer to this question we show that in both countries the design of state policy played a crucial role and the endogenous responses in the national system of innovation consisted of two parts on the one hand most of the time the predicted and desired outcome was partially realized and on the other hand there were invariably other unpredicted responses that emerged the latter unexpected elements which were specific to the two countries pushed them along distinctive trajectories

on committees of experts a committee makes a decision on a project on behalf of the public members of the committee agree on the a priori value of the project and hold additional private information about its consequences they are experts who care about the value of the project and about being considered well informed before voting on the project members can exchange their private information simultaneously we show that reputational concerns make the a priori unconventional decision more attractive and lead committees to show a united front these results hold irrespective of whether information can be manipulated or not also reputational concerns induce members to manipulate information and vote strategically if their preferences differ considerably from those of the member casting the decisive vote our last result is that the optimal voting rule balances the quality of information exchange and the alignment of interests of the decisive voter with those of the public

committee design with endogenous information this paper is concerned with the arrangements for collective decision making in a world where agents must be motivated to acquire information the analysis identifies some basic forces shaping the design of panels of decision makers referees managers jurors etc in situations where decision makers are useful only in so far as they expend some effort to gain information about the alternatives at hand these situations are common one being the refereeing process where an editor requires the opinions of a number of experts who must read the paper acquire information in order to give an opinion as to publication analogously in committees which screen applicants to a programme the committee members must gain information about the applicant s qualifications and likelihood of success in order to evaluate whether to admit him her finally in trial juries it is important that jurors pay attention to the evidence in order to make an informed judgement 1 we focus on environments where information is a public good in the sense that the social benefits of one decision maker acquiring information exceed the private benefits a good mechanism in this environment must not only aggregate information efficiently but also induce the decision makers to acquire information we analyse the design of voting mechanisms our problem is to choose two parameters which determine both the incentive to acquire information and the efficiency with which information is aggregated the first parameter is the size of the decision making unit the number of committee members the second is the plurality required to overturn the status quo the voting rule our main result is this a voting rule that requires a large plurality in the extreme unanimity to upset the status quo can be optimal only if the information available to each committee member is sufficiently accurate when individual information is noisy the drawback

bayesian learning in social networks we study the perfect bayesian equilibrium of a sequential learning model over a general social network each individual receives a signal about the underlying state of the world observes the past actions of a stochastically generated neighbourhood of individuals and chooses one of two possible actions the stochastic process generating the neighbourhoods defines the network topology we characterize pure strategy equilibria for arbitrary stochastic and deterministic social networks and characterize the conditions under which there will be asymptotic learning convergence in probability to the right action as the social network becomes large we show that when private beliefs are unbounded meaning that the implied likelihood ratios are unbounded there will be asymptotic learning as long as there is some minimal amount of expansion in observations we also characterize conditions under which there will be asymptotic learning when private beliefs are bounded

quantitative assessment of tariff endogeneity abstract the paper provides a quantitative assessment of the tariff endogeneity hypothesis in the macro context for the interwar and postwar u s economy there is an almost unidirectional causality running from unemployment and trade deficit to the average tariff rate during the interwar period while more interactive relationships hold in the postwar period compared with the interwar era there is a decline in the dependence of tariff on unemployment and trade deficit but the individual effect of unemployment on tariff has increased and that of trade deficit has decreased furthermore unanticipated shocks exert smaller and less persistent effects of tariff

continuous decisions by a committee median versus average mechanisms abstract a group of strategic agents with diverse private information and interdependent preferences has to take a continuous collective decision i study the design of the decision making procedure from the viewpoint of a utilitarian social planner for uniformly distributed information the implementation of the average report as decision dominates the implementation of the median report when the set of admissible reports is optimally designed this is true for any number of agents and for any degree of interdependence the result extends to a general class of distributions when the number of agents is large

get out the costly vote institutional design for greater participation institutions designed to increase turnout appeal to democratic sentiments but are highly debated as they entail two potentially countervailing eects while generating more pieces of information they may decrease the average voter s information quality we examine two commonly discussed institutions inducing participation abstention penalties used in 32 countries around the world and lotteries providing a prize to one randomly chosen participant as proposed on the 2006 arizona ballot we analyze a benchmark rational choice model in which voters vary in their information quality and participation is costly we illustrate that both institutions can improve collective outcomes though lotteries are a more eective instrument asymptotically in an array of lab experiments we empirically assess institutional performance we nd strong evidence for selective participation lab voters participate more when better informed or when institutionally induced however because subjects vote more often than the equilibrium predictions these institutions entail less welfare benets than theory prescribes lotteries do fare better than nes suggesting that they may be a useful alternative to commonly used compulsory

an experimental study of jury decision rules we present experimental results on groups facing a decision problem analogous to that faced by a jury we consider three treatment variables group size three or six number of votes needed for conviction majority or unanimity and pre vote deliberation we find evidence of strategic voting under the unanimity rule a large fraction of our subjects vote for a decision analogous to conviction even when their private information indicates a state analogous to innocence this is roughly consistent with the game theoretic predictions of feddersen and pesendorfer although individual behavior is explained well by the game theoretic model there are discrepancies at the level of the group decision contrary to feddersen and pesendorfer in our experiments there are fewer outcomes analogous to incorrect convictions under unanimity rule than under majority rule in the case of no deliberation we simultaneously account for the individual and group data using quantal response equilibrium

informational limits to democratic public policy the jury theorem yardstick competition and ignorance condorcet s jury theorem provides a possible explanation for the success of democracies relative to other forms of government in its modern form the jury theorem predicts that majority decisions are well informed because they are based upon far more information than possessed by any single individual on the other hand it is evident that democratic politicians and policies are not always as good as the jury theorem implies they should be

voting as communicating this paper develops a model where voters trade off two different motives when deciding how to vote they care about current decision making they are strategic but they also care about communicating their views about their most preferred candidate so as to influence future elections by influencing other voters opinion and or party positioning in effect voters in this model are intermediate between strategic and sincere voters of conventional models in elections with more than 2 candidates this allows us to better investigate the relative efficiency of various electoral systems our main conclusion is that since voting is used as a communication device electoral systems should be designed to facilitate efficient communication e g by opting for 2 round systems rather than 1 round systems

organizational decision making quality and the severity of the free riding problem abstract this letter proposes to view organizational decision making as a pure public good the problem of voluntary participation in the provision of the public good the quality of the organization s decisions is analyzed using a stylized game of participation we are chiefly concerned with the clarification of the relationship between the severity of the free riding problem and the quality of the decisional resources available to the organization

five questions an integrated research agenda for public choice all societies political or academic must choose among alternatives these choices can be good or bad the worst choice may be looking for answers before there is consensus or at least a debate on what the real questions should be five real questions are offered here in an integrated research agenda for public choice my premis is that there is a single fundamental human problem construct or preserve institutions that make self interested individual action not inconsistent with group welfare all social science research is either a distraction or a step toward understanding at least one of five questions 1 what are preferences 2 what are feasible alternatives 3 how much does the form of implementation affect the way alternatives are valued 4 how do alternatives chosen today affect the menu of alternatives available in the future 5 what is good how would we know if some outcomes are better than others

the option to wait in collective decisions and optimal majority rules abstract we consider a model in which voters over time receive more information about their preferences concerning an irreversible social decision voters can either implement the project in the first period or they can postpone the decision to the second period we analyze the effects of different majority rules individual first period voting behavior may become less conservative under supermajority rules and it is even possible that a project is implemented in the first period under a supermajority rule that would not be implemented under simple majority rule we characterize the optimal majority rule which is a supermajority rule in contrast to individual investment problems society may be better off if the option to postpone the decision did not exist these results are qualitatively robust to natural generalizations of our model

an incentive compatible condorcet jury theorem we consider a group of individuals who face a binary collective decision each group member holds some private information and all agree about what decision should be taken in each state of nature however the state is unknown and members can differ in their valuations of the two types of mistakes that might occur and in their prior beliefs about the true state for a slightly randomized majority rule we show that informative voting by all voters is the unique nash equilibrium that this equilibrium is strict and that the condorcet asymptotic efficiency result holds in this setting

preferences or private assessments on a monetary policy committee using bank of england voting data we show empirically that members votes are driven by heterogeneous individual assessments of the economy as well as their individual policy preferences estimates indicate that internal committee members form more precise assessments than externals and are also more hawkish the estimates allow the first quantification of the gain due to information aggregation on monetary policy committees the marginal gain from additional committee members tapers quickly after five members there is no evidence of gains through externals moderating internals preferences a relatively small committee of highly informed internal members emerges as a desirable committee structure

information aggregation in polls we study information transmission via polling a policymaker polls constitu ents who differ in their information and ideology to determine policy full rev elation is an equilibrium in a poll with a small sample but not with a large one in large polls full information aggregation can arise in an equilibrium where constituents endogenously sort themselves into centrists who respond truth fully and extremists who do not we find polling statistics that ignore strate gic behavior yield biased estimators and mischaracterize the polvs margin of error we construct estimators that account for strategic behavior finally we compare polls and elections jel c42 d83

strategic voting over strategic proposals prior research on strategic voting has reached the conclusion that unanimity rule is uniquely bad it results in destruction of information and hence makes voters worse off we show that this conclusion depends critically on the assumption that the issue being voted on is exogenous that is independent of the voting rule used we depart from the existing literature by endogenizing the proposal that is put to a vote and establish that under many circumstances unanimity rule makes voters better off moreover in some cases unanimity rule also makes the proposer better off even when he has diametrically opposing preferences in this case unanimity is the pareto dominant voting rule voters prefer unanimity rule because it induces the proposing individual to make a more attractive proposal the proposing individual prefers unanimity rule because the acceptance probabilities for moderate proposals are higher we apply our results to jury trials and debt restructuring

can politicians police themselves natural experimental evidence from brazil s audit courts to enhance government accountability reformers have advocated strengthening institutions of horizontal accountability particularly auditing institutions that can punish lawbreaking elected offi

investment criteria in single and multi member economic organizations this paper compares the determination of investment criteriain single and multi member organizations individualdecisional skills are assumed to be endogenous variables thatdepend on the investment criteria our main result specifiesthe condition that determines the relationship between theinvestment criteria in single and multi member organizations given the size of the multi member organization the decisionrule it applies and the function relating the individual sdecisional skills to the investment criterion theimplications of our main result are developed for specialorganizations such as hierarchies and polyarchies ouranalysis implies that the criteria in a multi memberorganization may be stricter than the criteria set in asingle member organization even though in the former case theorganization may worsen the average decision making ability ofits members the analysis can be applied not only in singleand multi member decision making settings but also in somecontexts of centralized and decentralized decisions this isillustrated in the case of decisions by editors ofprofessional journals regarding the acceptance or rejection ofsubmitted papers

skill value and remuneration in committees abstract relatively modest difference in individual decisional skills may warrant substantial inequality in personal remunerations this implies that the return on investment in decisional skills may be very high these claims are illustrated applying the uncertain dichotomous choice setting while clarifying the complex relationship between the individual skills the individual optimal decisional weights and the skill dependent values i e the individual probabilities to be pivotal

import prices and the political economy of tariffs evidence from germany japan and the united states 1954 1994 abstract endogenous protection theory suggests that macroeconomic conditions affect tariffs through policy responses to political pressure however import prices affect average tariffs even in the absence of policy changes i examine the effects of import prices and macroeconomic conditions in postwar germany japan and the united states finding strong evidence for the effect of import prices but little evidence consistent with endogenous protection theory

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

ignorance and bias in collective decisions we study theoretically and experimentally a committee with common interests committee members do not know which of two alternatives is the best but each member can acquire privately a costly signal before casting a vote under either majority or unanimity rule in the experiment as predicted by bayesian equilibrium voters are more likely to acquire information under majority rule and attempt to counter the bias in favor of one alternative under unanimity rule as opposed to bayesian equilibrium predictions however many committee members vote when uninformed moreover uninformed voting is strongly associated with a lower propensity to acquire information we show that an equilibrium model of subjective prior beliefs can account for both these phenomena and provides a good overall fit to the observed patterns of behavior both in terms of rational ignorance and biases

technology in a world of national frontiers abstract the accumulation of scientific knowledge and its application to production are accelerating the institutionalization of research in universities and corporate bodies was the first accelerator early in the century nationalism and the intensification of international competition are the current accelerators at the century s end nationalism increasingly drives r d through three mechanisms military rivalry trade rivalry and prestige rivalry the resultant steady rise in oecd countries r d spending as a percentage of gnp is by no means to be automatically applauded in particular it intensifies the problem of the developing countries for technology transfer remains for all the siren talk of alternatives a matter of hard slog learning and the task gets harder and harder

politics at the water s edge parties voters and the use of force abroad this article examines the effects of party politics and presidential election cycles on u s recourse to force abroad i analyze a game theoretic model to generate predictions about these effects in the unique time consistent equilibrium outcome of the one shot game policy varies across political parties in a subgame perfect equilibrium outcome of the repeated game the use of force is invariant to the partisan composition of government in neither case does policy respond to the electoral cycle an empirical analysis supports the predictions of the repeated game between 1870 and 1992 u s recourse to force abroad responds neither to partisan politics nor to the domestic political calendar it responds only to changes in u s power status and to the advent of general wars

government loan guarantees and the credit decision making structure governments can alleviate the problem of banks denying credit to high risk borrowers and excluding weaker sectors from borrowing by introducing state guaranteed loan programs the main contribution of this paper is the elucidation of the importance of the bank s credit decision making structure in ensuring overall effectiveness of loan guarantees in particular the government can use the guarantee as an instrument for credit inducement and for affecting the bank s decision making system i e its degree of centralization bias towards approval of loans and reliance on objective loan specific information

sincere voting in large elections abstract austen smith and banks 1996 showed that sincere informative voting is not typically an equilibrium of the condorcet voting model when the size of the electorate is large here we reverse their finding by adding a third type of voter one that receives no information in favor of either of the alternatives as well as global uncertainty about the probability that each voter is such a no evidence type the expected number of no evidence type voters can be arbitrarily small nevertheless if the electorate is large enough then each of the two standard condorcet types votes sincerely in every nondegenerate type symmetric equilibrium