Political Economics, Spring 2017

Instructor

Bruno Strulovici, 3213 Andersen Hall.
b-strulovici@northwestern.edu
Office hours: Fridays 10am-11am and 2pm-4pm

Lectures

Mondays and Wednesdays, 9:30am-10:45am, University Hall 122

Course Description: This course provides a rigorous analysis of key aspects of collective decision
making and institutional design. The first part concerns social choice: How can individual
preferences be aggregated into collective preferences and decisions? Which voting rules aredesirable? The second part will cover the interplay between preferences, incentives, and policyoutcomes. The last part applies the concepts and techniques to various policy issues: redistribution
and inequality, the comparison of collective decision rules such as representative and direct
democracy based on referendum and propositions, and institutional design.
Prerequisites: Economics 281, 310-1, 310-2.
Evaluation: 6 problem sets (25% of the final grade), two in-class exams (25% each of the finalgrade), and a short final project (remaining 25%).
Problem sets are due at beginning of class on Mondays. The worst problem set grade is dropped fromthe average.
First Exam:
Second Exam:
Project due date:

Wednesday, April 27
Wednesday, May 24
Wednesday, June 7

Exams will be open notes, but no electronic devices may be used.
[Any student who misses the midterm or final without accepted justification will receive no credit for the corresponding
exam. Medical reasons require written confirmation from the University health services or your doctor. Non-medical
reasons require a written excuse from official of the University (e.g., an official from the WCAS Dean's Office). A
makeup for the midterm or final will be permitted only if there is a good reason for missing the exam. Suspicion ofacademic dishonesty will be referred immediately to the Dean's Office.]

Textbook: Analyzing Politics, Rationality, Behavior and Institutions by Shepsle and Bonchek(Norton)

Lecture slides and other reading material will be posted on Canvas
Suggested readings (not required)
Political Economics by Persson and Tabellini (MIT Press)
Principled Agents? by T. Besley (Oxford University Press)

Course Overview
1. Introduction (Analyzing Politics, Ch. 1)
Overview of the key questions

2. Social Choice Theory (Analyzing Politics, Ch. 4)

Definition orders, preferences
Condorcet winner, Condorcet cycles, Divide the Dollar
Arrow’s theorem: assumption, result, intuition, meaning and implications
May’s theorem
Single-peakedness

3. Spatial Models of Majority Rule (Analyzing Politics, Ch. 5)Single peakedness and single crossing, Black’s Median Voter Theorem
Multidimensional preferences
Spatial models of legislatures: pure majority rule, closed-rule committee system, open-rulecommittee system

4. Strategic Behavior and Manipulation (Analyzing Politics, Ch. 6)
5. Investigations failures and evidence manipulation (Lecture Notes)
6. Voting methods (Analyzing Politics, Ch. 7)
7. Matching mechanisms (Lecture Notes)
8. Electoral Competition (Lecture Notes)
 Downs model Probabilistic voting Partisan politicians
9. Legislative Bargaining and Agenda-Setting (Lecture Notes)
10. Redistribution (Lecture Notes)
11. Campaign contributions and lobbying (Lecture Notes)
12. Voter Turnout (Lecture Notes)
13. Referendum, proposition, and citizen initiatives vs. Representative democracy (LectureNotes)