Economics 36101: Economic Models of Politics

Course Description: This course is an introduction to current research in political economics. The emphasis is on game-theoretic models that can be used to study the effects of different constitutional structures on the competitive behavior of politicians and the welfare-relevant performance of government. Strudents who take the course for credit will be required to present a paper from the reading list. Students can sign up for which date to present here. Please discuss with at least one of the instructors the paper you intend to present beforehand and co-ordinate with your fellow presenter to ensure that each student presents a different paper.

Class Schedule: Winter 2013. MW 12:00-1:20 in Roswenwald 11.

Instructors: Roger Myerson and Richard Van Weelden

Course Outline

Social Choice and the Spatial Models

1. Muller-Sattherwaite/Binary Agendas:

• Roger Myerson. 1996. "Fundamentals of social choice theory" Sections 1.2-1.5.

2. The Median Voter Theorem and Probabilistic Voting:

• Myerson, Sections 1.6-1.7.

• Randall Calvert 1985. "Robustness of the Multidimensional Voting Model: Candidate Motivations, Uncertainty, and Convergence." American Journal of Political Science 29 (1):69-95.

• Assar Lindbeck and Jorgen Weibull 1993. "A Model of Political Equilibrium in a Representative Democracy." Journal of Public Economics 51 (2):195-209.

• Dan Bernhardt, John Duggan, and Francesco Squintani 2009. "The Case for Responsible Parties." American Political Science Review 103 (4): 570-587.

3. Candidates:

• Timothy Besley and Stephen Coate 1997. "An Economic Model of Representative Democracy." Quarterly Journal of Economics 112 (1): 85-114.

• Martin Osborne and Al Slivinkski 1996. “A Model of Political Competition with Citizen Candidates.” Quarterly Journal of Economics 111 (1): 65-96.

• Roger Myerson 2008. "The Autocrat's Credibility Problem and Foundations of the Constitutional State." American Political Science Review 102 (1):125-139.

• Steven Callander 2008. "Political Motivations." Review of Economic Studies 75 (3):671-697.

4. Valence Models:

• Enriqueta Aragones and Thomas R. Palfrey 2002. "Mixed Equilibrium in a Downsian Model with a Favored Candidate." Journal of Economic Theory 103 (1):131-161.

• Timothy Groseclose 2001. "A Model of Candidate Location When One Candidate Has a Valence Advantage." American Journal of Political Science 45 (4):862-886.

• Scott Ashworth and Ethan Bueno de Mesquita 2009. "Elections with Platform and Valence Competition." Games and Economic Behavior 67 (1):191-216.

• Stefan Krasa and Mattias Polborn 2010. "Competition Between Specialized Candidates." American Political Science Review 104 (4):745-765.

Agency Models of Elections

5. Pure Moral Hazard

• John Ferejohn 1986. "Incumbent Performance and Electoral Control." Public Choice 50: 5-26.

• Timothy Besley 2006. "Principled Agents? The Political Economy of Good Government." (Oxford: Oxford University Press). Chapter 3.

• David Austen-Smith and Jeffrey Banks 1989. "Electoral Accountability and Incumbency." In Peter Ordeshook [ed.] Models of Strategic Choice in Politics (Ann Arbor: University of Michigan Press).

• Jeffrey S. Banks and Rangarajan K. Sundaram 1998. "Optimal Retention in Agency Problems." Journal of Economic Theory 82 (2): 293-323.

• Keneth Rogoff and Anne Sibert 1988. "Elections and Macroeconomic Policy Cycles." Review of Economic Studies 55 (1):1-16.

6. Ideological Competition and Agency Models:

• John Duggan 2000. “Repeated Elections with Asymmetric Information.” Economics and Politics 12 (2): 109-135.

• Dan Bernhardt, Larissa Campuazano, Odilon Camara, and Francesco Squintanti 2009. “On the Benefits of Party Competition.” Games and Economic Behavior 66 (2): 685-707.

• Dan Bernhardt, Odilon Camara, and Francesco Squintani 2011. “Competence and Ideology.” Review of Economic Studies 78 (2): 487-522.

• Richard Van Weelden 2012. “Candidates, Credibility, and Re-election Incentives.” Working paper.

7. Adverse Selection and Moral Hazard: Signal Jamming/Career Concerns:

• Scott Ashworth and Ethan Bueno de Mesquita. 2006. "Delivering the Goods: Legislative Particularism in Different Electoral and Institutional Settings." Journal of Politics 68 (1):168-179.

• Scott Ashworth. 2005. "Reputational Dynamics and Congressional Careers." Journal of Law, Economics, and Organization 21 (2):441-466.

• Matthew Gentzkow and Jesse Shapiro. 2006. "Media Bias and Reputation." Journal of Political Economy 114 (2): 280-316.

• Susanne Lohmann. 1998. "AnInformational Rationale for the Power of Special Interests." American Political Science Review 92 (4): 809-27.

• Navin Kartik and Preston McAfee. 2007. "Signaling Character in Electoral Competition." American Economic Review 97 (3): 852-870.

8. Lobbying and Common Agency:

• Avinash Dixit, Gene Grossman, and Elhanan Helpman 1997. "Common Agency and Coordination: General Theory and Applications to Government Policymaking." Journal of Political Economy 105 (4): 752-769.

• Gene Grossman and Elhanan Helpman 1996. "Electoral Competition and Special Interest Politics." Review of Economic Studies 63 (2):265-286.

• Andrea Prat 2002. "Campaign Spending with Office-Seeking Politicians, Rational Voters, and Multiple Lobbies." Journal of Economic Theory 103 (1):169-189.

• Ernesto Dal Bo, Pedro Dal Bo, and Raphael DiTella 2006. “Plato o Plomo:Bribe and Punishment in a Theory of Political Influence.” American Political Science Review 100 (1): 41-53.

9. Pandering:

• Eric Maskin and Jean Tirole 2004. "The Politician and the Judge: Accountability in Government." American Economic Review 94 (4): 1034-1054.

• Brandice Canes-Wrone, Michael C. Herron and Kenneth W. Shotts 2001. "Leadership and Pandering: A Theory of Executive Policymaking." American Journal of Political Science 45 (3): 532-550.

• Gilat Levy 2004. “Anti-herding and Strategic Consultation.” European Economic Review 48 (3): 503-525.

• Justin Fox and Matthew Stephenson 2011. “Judicial Review as a Response to Political Posturing.” American Political Science Review 105: 397-414.

Voting

10. Information Aggregation and the Swing Voter's Curse:

• Timothy Feddersen and Wolfgang Pesendorfer 1996. "The Swing Voter's Curse." American Economic Review 86 (3): 408-424.

• Timothy Feddersen and Wolfgang Pesendorfer 1997. "Voting Behavior and Information Aggregation in Elections with Private Information." Econometrica 65 (5):1029-1058.

• Roger Myerson 1998. "Extended Poisson Games and the Condorcet Jury Theorem." Games and Economic Behavior 25 (1):111-131.

• Martin Osborne and Matthew Turner 2010. "Cost Benefit Analyses versus Referenda." Journal of Political Economy 118 (1): 156-187.

• Laurent Bouton and Micael Castanheira 2010. "One Person, Many Votes: Divided Majority and Information Aggregation." Econometrica 80 (1): 43-87.

11. Turnout:

• Vijay Krishna and John Morgan 2011. “Overcoming Ideological Bias In Elections.” Journal of Political Economy 119 (2): 183-211.

• Helios Herrera, Massimo Morelli and Tom Palfrey 2012. “Turnout and Power Sharing.” Working Paper.

• Tim Feddersen and Aldo Sandroni 2006. “A Theory of Participation in Large Elections.” American Economic Review 96 (4): 1271-1282.

12. Deliberation:

• Marco Ottaviani and Peter Sorenson 2001. “Information Aggregation and Debate: Who Should Speak First?” Journal of Public Economics 81 (3): 393-421.

• David Austen-Smith and Tim Feddersen 2006. “Deliberation, Preference Uncertainty, and Voting Rules.” American Political Science Review 100 (2): 209-218.

• Dino Gerardi and Leeat Yariv (2007). “Deliberative Voting.” Journal of Economic Theory 134 (1): 313-338.

• Richard Van Weelden (2008). “Deliberation Rules and Voting.” Quarterly Journal of Political Science 3 (1): 83-88.

Comparative Electoral Systems

13. Electoral outcomes under Different Electoral Systems:

• Roger Myerson 1993. "Incentives to Cultivate Favored Minorities under Alternative Electoral Systems." American Political Science Review 87 (4):856-869.

• Alessandro Lizzeri and Niccolo Persico 2001. “The Provision of Public Goods under Alternative Electoral Incentives.” American Economic Review 91 (1): 225-239.

• Gary Cox 1987. "Electoral Equilibria Under Alternative Voting Institutions." American Journal of Political Science 31 (1):82-108.

• Gary Cox 1994. "Strategic Voting Equilibria under Single Non-Transferable Vote." American Political Science Review 88 (3):608-621.

• Roger Myerson 2006. "Bipolar Multicandidate Elections with Corruption." Scandinavian Journal of Economics 108 (4):727-742.

14. Federalism:

• Dennis Epple and Allan Zelenitz 1981. "The Implications of Competition among Jurisdictions: Does Tiebout Need Politics?" Journal of Political Economy 89 (6):1197-1217.

• Avinash Dixit and John Londregan 1998. "Fiscal Federalism and Redistributive Politics." Journal of Public Economics 68 (2):153-180.

• Roger Myerson 2006. "Federalism and Incentives for Success of Democracy." Quarterly Journal of Political Science 1 (1):3-23.

Legislative Politics

15. Information Transmission under Alternative Legislative Rules:

• Vincent Crawford and Joel Sobel 1982. "Strategic Information Transmission." Econometrica 50 (6): 1431-1451.

• Tom Gilligan and Keith Krehbriel 1990. "Organization of Informative Committees by a Rational Legislature." American Journal of Political Science 34 (2):531-564.

• Marco Battaglini 2003. "Multiple Referrals and Multidimensional Cheap Talk." Econometrica 70 (4): 1379-1401.

• Steven Callander 2008. "A Theory of Policy Expertise." Quarterly Journal of Political Science 3 (2): 123-140.

16. Legislative Bargaining:

• David Baron and John Ferejohn 1989. "Bargaining in Legislatures." American Political Science Review 83 (4):1181-1206.

• David Austen-Smith and Jeff Banks 1988. "Elections, Coalitions and Legislative Outcomes." American Political Science Review 82 (2): 405-422.

• Jeffrey Banks and John Duggan 2000. “A Bargaining Model of Collective Choice.” American Political Science Review, 94 (1): 73-88.

• Marco Battaglini and Stephen Coate 2008. "A Dynamic Theory of Public Spending, Taxation, and Debt." American Economic Review, 98 (1): 201-36.

17. Legislative Organization:

• Tom Gilligan and Keith Kreihbel. 1987. “Collective Decision-making and Standing Committees: An Informational Role for Restrictive Amendment Procedures.” Journal of Law, Economics and Organization 3 (2): 287-335.

• Daniel Diermeier and Roger Myerson. 1999. "Bicameralism and its Consequences for the Internal Organization of Legislatures." American Economic Review 89 (5):1182-1196.

• Daniel Diermeier and Timothy Feddersen. 1998. "Cohesion in Legislatures and the Vote of Confidence Procedure." American Political Science Review 92 (3): 611-621.

Endogenous Institutions and Institutional Stability

18. Property Rights:

• Catherine Hafer 2006. "On the Origins of Property Rights: Conflict and Production in the State of Nature." Review of Economic Studies 73 (1):119-143.

• Roger Myerson 2004. "Justice, institutions, and multiple equilibria." Chicago Journal of International Law 5:91-107.

• Timothy Besley and Torsten Persson 2009. "The Origins of State Capacity." American Economic Review 99 (4):1218-1244.

19. Nondemocratic Politics:

• Bruce Bueno de Mesquita, Alastair Smith, Randolph Siverson, and James Morrow 2003. The Logic of Political Survival. (Cambridge: MIT Press). Chapters 2 and 3.

• Bruce Bueno de Mesquita, and Alastair Smith 2008. "Political Survival and Endogenous Institutional Change." Comparative Political Studies 42 (2): 167-197.

• Robert Bates, Avner Greif, and Smita Singh 2002. "Organizing Violence." Journal of Conflict Resolution 46 (5): 599-628.

• Roger Myerson 2010. "Capitalist Investment and Political Liberalization." Theoretical Economics 5 (1): 73-91.

20.Redistribution and the Revolutionary Threat:

• Daron Acemoglu and James Robinson 2000. "Why Did the West Extend the Franchise?" Quarterly Journal of Economics 115 (4):1167-1199.

• Alessandro Lizzeri and Nicola Persico 2004. "Why Did the Elites Extend the Suffrage?" Quarterly Journal of Economics 119 (2):707-765.

• Stephen Morris and Hyun Song Shin 2001. "Global Games: Theory and Applications." Working Paper.

• James Fearon 2011. "Self Enforcing Democracy." Quarterly Journal of Economics 126 (4): 1661-1704.