risk aversion and bandwagon effect in the pivotal voter model the empirical literature on the effects of opinion polls on election outcomes has recently found substantial evidence of a bandwagon effect defined as the phenomenon according to which the publication of opinion polls is advantageous to the candidate with the greatest support this result is driven in the lab experiments by a higher turnout rate among the majority than among the minority such evidence is however in stark contrast with the main theoretical model of electoral participation in public choice the pivotal voter model which predicts that the supporters of an underdog candidate participate at a higher rate given the higher probability of casting a pivotal vote this paper tries to reconcile this discrepancy by showing that a bandwagon effect can be generated within the pivotal voter model by concavity in the voters utility function which makes electoral participation more costly for the expected loser supporters given the strict relationship between concavity and risk aversion the paper also establishes the role of risk aversion as a determinant of bandwagon

neighborhood information exchange and voter participation an experimental study we study the effect of social embeddedness on voter turnout by investigating the role of information about other voters decisions we do so in a participation game in which we distinguish between early and late voters each late voter is told about one early voter s turnout decision cases are distinguished where the voters are allies support the same group or adversaries with opposing preferences and where they are uncertain about each other s preferences our experimental results show that the social embeddedness matters this information increases aggregate turnout by approximately 50 the largest effect is observed for allies early voters strategically try to use their first mover position and late voters respond to this

the performance of pivotal voter models in small scale elections evidence from texas liquor referenda abstract this paper explores the ability of pivotal voter models to explain voter behavior in small scale elections using data from texas liquor referenda the findings provide little support for the view that pivotal voter models are a reasonable theory for understanding small scale elections interestingly this is not because they cannot explain the levels of turnout in the data but rather because they cannot explain the size of the winning margins the logic of pivotal voter models implies that elections must be expected to be close even if there is a significant difference between the sizes of the groups or the intensity of their preferences with even a relatively small number of eligible voters elections that are expected to be close ex ante must end up being close ex post however in the data winning margins are often significant

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

women don t run election aversion and candidate entry to study gender differences in candidate emergence we conduct a laboratory experiment in which we control the incentives potential candidates face manipulate features of the electoral environment and measure beliefs and preferences we find that men and women are equally likely to volunteer when the representative is chosen randomly but that women are less likely to become candidates when the representative is chosen by an election this difference does not arise from disparities in abilities risk aversion or beliefs but rather from the specific competitive and strategic context of campaigns and elections thus we find evidence that women are election averse whereas men are not election aversion persists with variations in the electoral environment disappearing only when campaigns are both costless and completely truthful

turnout across democracies world democracies widely differ in legislative executive and legal institutions different institutional environments induce different mappings from electoral outcomes to the distribution of power we explore how these mappings affect voters participation in an election we show that the effect of such institutional differences on turnout depends on the distribution of voters preferences we uncover a novel contest effect given the preferences distribution turnout increases and then decreases when we move from a more proportional to a less proportional power sharing system turnout is maximized for an intermediate degree of power sharing moreover we generalize the competition effect common to models of endogenous turnout given the institutional environment turnout increases in the ex ante preferences evenness and more so when the overall system has lower power sharing these results are robust to a wide range of modeling approaches including ethical voter models voter mobilization models and rational voter models

forms of external capital and economic development in latin america 1820 1997 abstract this paper examines the risks and constraints of different forms of capital inflows and costs of not honoring these obligations in latin america from independence in the 1820s through 1997 the constraints and risks of inflows during each period are shown to depend on the maturity structure nature of risk sharing and whether the inflow is from private or official sources the penalties imposed depend on the linkages among creditors and among different financial contracts such as debt and equity we show the importance of distinguishing between new forms of short term portfolio debt and equity and different forms of portfolio equity inflows such as adrs closed and open end country funds and domestic equity purchases by examining their behavior in the aftermath of the mexican crisis the policy recommendation is that portfolio equity and long term portfolio debt inflows should be encouraged over short term debt inflows especially those with explicit or implicit government guarantees on the banking system and exchange rate policy

political scale and electoral turnout evidence from the less industrialized world this article attempts to bring the politics of scale back into the study of comparative politics explicitly focusing on the question of electoral turnout in the less industrialized world it explo

strategic voting when participation is costly abstract we study a general multiparty model of plurality rule elections with costly participation and prove that strategic voting that is situations in which some voters abandon their most preferred alternative and vote strategically for the serious contender they dislike less may emerge in equilibrium just like when participation is costless compulsory palfrey 1989 this qualifies opposite claims made in more confined setups e g arzumanyan and polborn 2017 and establishes that duverger s psychological effect is present in a much larger set of cases than currently believed

mandate and paternalism a theory of large elections we propose a game theoretic costly voting model of large elections that incorporates the assumption that mandate matters this innovation is motivated by empirical evidence that us representatives with larger victory margins on average vote in a more partisan manner if voters are paternalistic this new model predicts strictly positive limiting turnout rates as the population grows arbitrarily large the model also preserves stylized comparative statics results of costly voting models including the underdog effect and the competition effect finally we develop an innovative computational strategy to solve the model for large finite electorates and show that our results are not only qualitatively but also quantitatively relevant

information aggregation and turnout in proportional representation a laboratory experiment abstract this paper documents a laboratory experiment that analyzes voter participation in common interest proportional representation pr elections comparing this with majority rule consistent with theoretical predictions poorly informed voters in either system abstain from voting thereby shifting weight to those who are better informed a dilution problem makes mistakes especially costly under pr so abstention is higher in pr in contrast with private interest environments and welfare is lower deviations from nash equilibrium predictions can be accommodated by a logit version of quantal response equilibrium qre which allows for voter mistakes

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

syndicated lending under asymmetric creditor information abstract this paper explores how asymmetric information about borrower quality among syndicated lenders alters the incentive to refinance illiquid borrowers we use a model in which lenders enter the market sequentially in two rounds of lending between the two rounds a shock separates borrowers into good ones and bad ones and early entrants acquire information about individual borrower type while late entrants know only the distribution of borrower types the asymmetric information structure gives rise to both signalling and screening issues we show that self selecting contracts do not exist and that there is always a pooling perfect bayesian equilibrium in which late entrants lend to both good and bad types without borrower type being exposed before final clearing at the terminal time based on this framework we argue that prior to the 1982 international debt crisis it was possible for banks with heavy exposure to troubled debtors to attract rational newcomers in syndicated loans which were with positive probability bailout loans

a natural experiment in proposal power and electoral success does lawmaker behavior influence electoral outcomes observational studies cannot elucidate the effect of legislative proposals on electoral outcomes since effects are confounded by unobserved differences in legislative and political skill we take advantage of a unique natural experiment in the canadian house of commons that allows us to estimate how proposing legislation affects election outcomes the right of noncabinet members to propose legislation is assigned by lottery comparing outcomes between those who were granted the right to propose and those who were not we show that incumbents of the governing party enjoy a 2 7 percentage point bonus in vote total in the election following their winning the right to introduce a single piece of legislation which translates to a 7 increase in the probability of winning the causal effect results from higher likeability among constituents these results demonstrate experimentally that what politicians do as lawmakers has a causal effect on electoral outcomes

behavior in group contests a review of experimental research group contests are ubiquitous some examples include warfare between countries competition between political parties team incentives within firms group sports and rent seeking in order to succeed members of the same group have incentives to cooperate with each other by expending individual efforts however since effort is costly each member also has an incentive to abstain from expending any effort and instead free ride on the efforts of other members contest theory shows that the intensity of competition between groups and the amount of free riding within groups depend on the group size sharing rule group impact function contest success function and heterogeneity of players we review experimental studies testing these theoretical predictions almost all studies of behavior in group contests find significant over expenditure of effort relative to the theory we discuss potential explanations for such over expenditure including the utility of winning bounded rationality relative payoff maximization parochial altruism and social identity despite over expenditure most studies find support for the comparative statics predictions of the theory with the exception of the group size paradox finally studies show that there are effective mechanisms that can promote within group cooperation and conflict resolution mechanisms that can de escalate and potentially eliminate between group conflict

battleground states and voter participation in us presidential elections an empirical test the winner take all method of allocating electoral college votes in 48 of the 50 states in us presidential elections has promoted interesting behaviours by politicians and states that are evident throughout us economic history this analysis explores the impact that being a battleground state in presidential elections has on future voter participation rates after quantifying the degree to which each state is a battleground state the empirical analysis proffers what it refers to as the battleground voting hypothesis which argues that the greater the degree to which a given state is a battleground state the greater the expected benefits from voting in that state and hence the greater the voter turnout in that state the empirical results suggest that the top to bottom battleground state effect generated an average of 7 8 additional percentage points in voter participation in presidential elections over the period 1964 2008 for those states at the top of the scale

the paradox of voter participation a laboratory study it is widely believed that rational choice theory is grossly inconsistent with empirical observations about voter turnout we report the results of an experiment designed to test the voter turnout predictions of the rational choice palfrey rosenthal model of participation with asymmetric information we find that the three main comparative statics predictions are observed in the data the size effect whereby turnout goes down in larger electorates the competition effect whereby turnout is higher in elections that are expected to be close and the underdog effect whereby voters supporting the less popular alternative have higher turnout rates we also compare the quantitative magnitudes of turnout to the predictions of nash equilibrium we find that there is undervoting for small electorates and overvoting for large electorates relative to nash equilibrium these deviations from nash equilibrium are consistent with the logit version of quantal response equilibrium which provides a good fit to the data and can also account for significant voter turnout in very large elections

the downsian model of electoral participation formal theory and empirical analysis of the constituency size effect this paper applies a game theoretic model of participation under uncertainty to investigate the negative relationship between constituency size and voter turnout rates theconstituency size effect we find that this theoretical model accounts for almost all of the variation in turnout due to size in cross sectional data from school budget referenda

voting with endogenous information acquisition experimental evidence abstract the condorcet jury model with costless but informative signals about the true state of the world predicts that the efficiency of group decision making increases unambiguously with the group size however if signal acquisition is made an endogenous and costly decision then rational voters have disincentives to purchase information as the group size becomes larger we investigate the extent to which human subjects recognize this trade off between better information aggregation and greater incentives to free ride in a laboratory experiment where we vary the group size the cost of information acquisition and the precision of signals we find that the theory predicts well in the case of precise signals however when signals are imprecise free riding incentives appear to be much weaker as there is a pronounced tendency for subjects to over acquire information relative to equilibrium predictions we rationalize the latter finding using a quantal response equilibrium that allows for risk aversion

electoral competition with third party entry in the lab abstract electoral competition between two vote share maximizing candidates in the context of the unidimensional spatial model leads to platform convergence both candidates end up proposing the ideal policy of the median voter downs 1957 palfrey 1984 famously argued that if third candidate entry is expected after the two main candidates choose their platforms the unique equilibrium is such that the two main candidates locate substantially far from each other by conducting a laboratory experiment we put this popular idea to test for the first time we allow entry to take place with four different probabilities and find that indeed the degree of polarization of the two main candidates platforms increases as third candidate entry becomes more likely to occur providing strong evidence in support of palfrey 1984 s formal results and underlying intuition

sovereign debt optimal contract underinvestment and forgiveness in this paper we develop a time consistent rational expectations model which analyzes the equilibrium loan contract between a borrowing country and a foreign bank the loan contract specifies both the amount of the loan and the promised interest payments and rationally reflects the investment decisions of the country and the possibilities of renegotiation and repudiation of the debt an important feature of the model is that at the initial negotiation of the loan there is uncertainty about whether the country will renegotiate for partial forgiveness in the future and whether it will eventually repudiate the debt even having successfully renegotiated moreover the probabilities of renegotiation and repudiation and the amount of possible forgiveness are endogenously determined in the model the repudiation decision is directly related to the underinvestment problem the objective of the renegotiation is precisely to alleviate this problem the model is used to analyze the effects of four variables on both the optimal contract and the country s welfare the degree of penalties that a bank can impose on a defaulting country the uncertainty of production the productivity of investments and the riskless interest rate the analysis has policy implications as well as testable predictions during the last ten years the issues related to less developed countries ldcs debt have become increasingly more important in the world economy the main reason for this is the significant increase in the amount of debt outstanding and the consequent higher yearly interest payments by 1988 seventeen highly indebted countries had an aggregated debt of 510 billion dollars see rogoff 1990 a second important reason is that starting in 1982 some of these countries suspended debt service payments creating a serious crisis of confidence in the banking system of the lending countries as a consequence borrowers and lenders have had to engage in negotiations including the rescheduling of the repayments and possibly partial forgiveness a number of papers have suggested that forgiveness could conceivably make both lenders and borrowers better off because the country

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

referendum design quorum rules and turnout in this article we focus on the consequences of quorum requirements for turnout in referendums we use a rational choice decision theoretic voting model to demonstrate that participation quorums change the incentives some electors face inducing those who oppose changes in the status quo and expect to be in the minority to abstain as a result paradoxically participation quorums decrease electoral participation we test our model s predictions using data for all referendums held in current european union countries from 1970 until 2007 and show that the existence of a participation quorums increases abstention by more than ten percentage points

homo ludens social rationality and political behavior the most straightforward defense of political democracy is grounded in rational choice political democracy gives people power in public life parallel to that afforded by markets in private life the power to turn their preferences into social outcomes however rational choice models of voter behavior dramatically underpredict voter turnout in all but the smallest elections fiorina 1990 has called this the paradox that ate rational choice theory this anomaly is the centerpiece of green and shapiro s 1994 critique of rational choice methodology in political theory this paper proposes a form of social rationality that strengthens the classical rational actor model this concept explains many central statistical regularities concerning voter turnout and the historical regularities concerning collective action

a group rule utilitarian approach to voter turnout theory and evidence this paper explores a group rule utilitarian approach to understanding voter turnout inspired by the theoretical work of john c harsanyi 1980 and timothy j feddersen and alvaro sandroni 2002 it develops a model based on this approach and studies its performance in explaining turnout in texas liquor referenda the results are encouraging the comparative static predictions of the model are broadly consistent with the data and a structurally estimated version of the model yields reasonable coefficient estimates and fits the data well the structurally estimated model also outperforms a simple expressive voting model

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

public information and electoral bias abstract we present a theory of voting that predicts that elections are more likely to be close and voter turnout is more likely to be high when citizens possess better public information about the composition of the electorate these findings suggest that providing more information to potential voters about aggregate political preferences e g through pre election polls or expert forecasts may undermine the democratic process our analysis reveals that if the distribution of political preferences is common knowledge then the unique type symmetric equilibrium leads to a stark neutrality result in which each alternative is equally likely to win the election by contrast when citizens are ignorant about the preference distribution the majority is more likely to win the election and expected voter turnout is lower welfare is therefore unambiguously higher when citizens possess less information about the preference distribution

communication and voting in multi party elections an experimental study we investigate communication and costly voting in multi party election experiments turnout is consistently lower across electorate communication as compared with restricted communication within parties voters are more likely to choose the strategic voting option at the outset in restricted communication but more likely to start deliberation by stating their first preference when unrestricted distributions of earnings are more inequitable when communication is restricted and the candidate preferred by the minority of voters is more likely to win we also find that even restricted communication significantly increases participation and strategic voting by swing voters above and beyond induced identity effects

law enforcement and political participation italy 1861 65 abstract does tougher law enforcement positively affect political participation this paper addresses this question which hinges upon the causal impact of formal institutions on informal ones by using a historical event from 19th century italy this event was the pica law which was introduced in 1863 to fight a surge of criminal violence in southern italy and to ensure a safer environment for wealthy people the only ones allowed to vote at that time our main finding obtained using a spatial regression discontinuity technique in a diff in diffs framework is that voter turnout greatly increased in those areas where the pica law was applied compared with bordering and otherwise similar areas this result is confirmed by a number of robustness checks and placebo exercises and turns out to be persistent over time

complete information pivotal voter model with asymmetric group size we study the equilibria of the standard pivotal voter participation game between two groups of voters of asymmetric sizes majority and minority as originally proposed by palfrey and rosenthal public choice 41 1 7 53 1983 we find a unique equilibrium wherein the minority votes with certainty and the majority votes with probability in 0 1 we prove that this is the only equilibrium in which voters of only one group play a pure strategy and we provide sufficient conditions for its existence equilibria where voters of both groups vote with probability in 0 1 are analyzed numerically

voter participation and strategic uncertainty the paradox of not voting is examined in a model where voters have uncertainty about the preferences and costs of other voters in game theoretic models of voter participation under complete information equilibrium outcomes can have substantial turnout even when voting costs are relatively high in contrast when uncertainty about preferences and costs is present only voters with negligible or negative net voting costs participate when the electorate is large

is mandatory voting better than voluntary voting we investigate the welfare effects of policies that increase voter turnout in costly voting models in a generalized costly voting model we show that if the electorate is sufficiently large then increasing voter turnout is generically efficient increasing turnout in small elections is only inefficient if the electorate is evenly divided or if there is already almost complete voter participation finally we argue that the effects underlying our results are robust in a large class of endogenous participation models

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

a unified analysis of rational voting with private values and group specific costs we provide a unified analysis of the canonical rational voting model with privately known political preferences and costs of voting focusing on type symmetric equilibrium we show that for small electorates members of the minority group vote with a strictly higher probability than do those in the majority but the majority is strictly more likely to win the election as the electorate size grows without bound equilibrium outcome is completely determined by the individuals possessing the lowest cost of voting in each political group we relate our equilibrium characterization to myerson s poisson games and examine the potential uniqueness of equilibrium

the swing voter s curse in the laboratory this paper reports the first laboratory study of the swing voter s curse and provides insights on the larger theoretical and empirical literature on pivotal voter models our experiment controls for different information levels of voters as well as the size of the electorate the distribution of preferences and other theoretically relevant parameters the design varies the share of partisan voters and the prior belief about a payoff relevant state of the world our results support the equilibrium predictions of the feddersen pesendorfer model and clearly reject the notion that voters in the laboratory use naive decision theoretic strategies the voters act as if they are aware of the swing voter s curse and adjust their behavior to compensate while the compensation is not complete and there is some heterogeneity in individual behavior we find that aggregate outcomes such as efficiency turnout and margin of victory closely track the theoretical predictions

sovereign debt and the london club a precommitment device for limiting punishment for default abstract in this paper we examine the role that institutions may play in enabling banks to write contracts whereby sovereign debt is not forgiven ex post our model provides a rationale for the emergence of a centralized forum for debt renegotiation such as the london club as well as for bank syndicates these bank syndicates arise as part of a pre commitment device rather than for risk sharing purposes we propose a debt contract under which only involuntary default is forgiven ex post our main findings are that under this contract debt forgiveness after voluntary strategic default is avoided when voluntary default occurs access to the credit market is denied only for a limited number of periods rather than forever in contrast to a voluntary default involuntary default is forgiven immediately

an explanation of anomalous behavior in models of political participation this paper characterizes behavior with noisy decision making for models of political interaction characterized by simultaneous binary decisions applications include voting participation games candidate entry the volunteer s dilemma and collective action problems with a contribution threshold a simple graphical device is used to derive comparative statics and other theoretical properties of a quantal response equilibrium and the resulting predictions are compared with nash equilibria that arise in the limiting case of no noise many anomalous data patterns in laboratory experiments based on these games can be explained in this manner

information reusability competition and bank asset quality this paper explains the recent decline in bank asset quality using the notion of information reusability banks are viewed as information processors they exist because of their advantage in extracting the surplus associated with the reusability of borrower specific information it is shown that a bank s incentive to screen loan applicants and hence maintain the quality of its assets depends on the surplus this screening can produce which in turn depends on information reusability two recent changes in banks operating environment are increased competitition and greater temporal volatility in borrower credit risks the former has directly reduced banks informational surplus while the latter has impaired information reusability hence screening expenditures have been reduced and the diminution of screening has lowered the quality of bank assets it is also shown that an increase in deposit insurance premia has an effect similar to that of narrowing interest spreads and therefore will result in reduced asset screening and impaired asset quality

what is different about international lending an attempt is made to explain how enforceability is achieved n international debt contracts each bank announces the policy of denying credit to borrowers who default and chooses to adhere to it to maintain its reputation of being a tough bank to discipline its other borrowers loans are made by syndicates of banks in order to make the penalty for default severe enough so borrowers would choose not to default voluntarily the model predicts that the interest rate charged on loans is smaller for the larger borrowers also for any given borrower the interest rate may fall after each successive default article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

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

heterogeneous creditors and the market value of bank ldc loan portfolios abstract a standard proposition used in many empirical studies is that the value of an ldc loan does not depend on the identity of the lender i test this proposition using bank securities prices and prices for ldc loans trading in the secondary market i find significant cross sectional differences in the sensitivity of bank stocks to changes in the price of ldc loans differences in sensitivity appear to be related to changes in bank exposure to ldcs i also find evidence consistent with the hypothesis that cds are implicitly insured

advocacy and political convergence under preference uncertainty we study the formation of advocacy groups and how they can impact policy outcomes by revealing information about voters preferences to uninformed political candidates we conduct a laboratory experiment based on a two candidate spatial electoral competition setting where the policy preferences of voters are initially unknown and change over time in the control treatment candidates learn about the preferred policy of the median voter through the voting outcome of elections in the advocacy treatments voters can organize themselves into advocacy groups in order to reveal their policy preferences we find that voters often overcome the collective action problem of forming an advocacy group in fact we observe the formation of both informative advocacy groups which convey new information and uninformative advocacy groups which do not overall advocacy groups significantly speed up the convergence to the preferred policy of the median voter however advocacy does not lead to higher earnings as the gains from faster convergence are offset by the costs of group formation

institutions and behavior experimental evidence on the effects of democracy a novel experiment is used to show that the effect of a policy on the level of cooperation is greater when it is chosen democratically by the subjects than when it is exogenously imposed in contrast to the previous literature our experimental design allows us to control for selection effects e g those who choose the policy may be affected differently by it our finding implies that democratic institutions may affect behavior directly in addition to having effects through the choice of policies our findings have implications for the generalizability of the results of randomized policy interventions

bond restructuring and moral hazard are collective action clauses costly abstract recent emerging market crises have prompted debate over the costs and benefits of collective action clauses cacs in bond contracts cacs may facilitate the restructuring of repayment terms in the event of financial distress proponents of cacs argue they should lower borrowing costs while opponents contend that they lead to moral hazard and increased borrowing costs this paper examines the pricing of bonds with and without cacs using data for both primary and secondary market yields and finds no evidence that the presence of cacs has increased yields for either higher or lower rated issuers

competition cooperation and collective choice the ability of groups to implement efficiency enhancing institutions is emerging as a central theme of research in economics this study explores voting on a scheme of intergroup competition which facilitates cooperation in a social dilemma situation experimental results show that the competitive scheme fosters cooperation competition is popular but the electoral outcome depends strongly on specific voting rules of institutional choice if the majority decide competition is almost always adopted if likely losers from competition have veto power it is often not and substantial gains in efficiency are foregone

moral bias in large elections theory and experimental evidence in this article we provide evidence that voters in large elections tend to vote against their material self interest and to vote for a morally or ethically appealing alternative it may seem puzzling that voters might behave differently in small elections than they do in large ones however we show that such behavior is a logical consequence of voters having a conflict between obtaining a better material outcome and choosing a moral action we develop a simple model of this conflict and show that decreasing the probability that a single vote is decisive i e pivot probability reduces the importance of outcomes relative to actions in voter decision making because pivot probability is generally small in large elections alternatives that are understood by voters to be morally superior are more likely to win in large elections than in small ones thus compared to the preferences of voters election results will be biased in favor of moral alternatives 1 the model produces a set of predictions that we test in a laboratory experiment to clarify ideas consider a situation in which two outcomes are possible a and b assume that b gives

altruism and voting a large turnout result that does not rely on civic duty or cooperative behavior abstract i propose a game theoretic model of costly voting that predicts significant turnout rates even when the electorate is arbitrarily large the model has two key features that jointly drive the result i some agents are altruistic or ethical ii among the agents who prefer any given candidate the fraction of altruistic agents is uncertain when deciding whether to vote or not an altruistic agent compares her private voting cost with the expected contribution of her vote to the welfare of the society under suitable homogeneity assumptions the asymptotic predictions of my model coincide with those of feddersen and sandroni 12 up to potential differences between the respective parameters that measure the importance of the election i demonstrate with an example that these homogeneity assumptions are not necessary for qualitative predictions of my model i also show that when the fractions of altruistic agents are known turnout rates will typically be close to zero in a large election despite the presence of altruism

end of 9 endings price recall and price perceptions prices that end with 9 also known as psychological price points are common comprising about 70 of the retail prices they are also more rigid than other prices we take advantage of a natural experiment to document an emergence of a new price ending that has the same effects as 9 endings in january 2014 the israeli government passed a new regulation prohibiting the use of non 0 ending prices bringing an end to 9 ending prices we find that seven months after 9 ending prices have disappeared 90 ending prices acquired the same status as 9 ending prices had before the new regulation was adopted thus 90 ending prices became the new psychological price points partially eliminating the regulation s intended effect

voter turnout and the principle of one person one vote empirical evidence from the constituency freeze in india this article uses panel data from national and state elections in india during the period 1977 2007 to examine the effect of inequality in constituency population size on voter turnout during this period constituency boundaries in india remained fixed as a result differences in population size between constituencies increased thus changing the value of a single vote using this large variation in population size and informative data this article carefully distinguishes the effect of population size from other factors we find that an increase of one million electorates decreases voter turnout by 12 27 in addition we find that the share of votes gained by national political parties is greater in small population constituencies this suggests that political parties direct their efforts in electoral campaigns preferentially to less populous constituencies as a result voters in small constituencies are more likely to participate in elections