The stability of logrolling: An expectations approach

This essay provides an explanation for the existence of stable logrolling arrangements. The model presented assumes that issues are voted on one at a time, that people are risk averse, and that each person forecasts future issue decisions with a random variable whose mean is linear in the alternatives of the present issue. We show that under this model, the expectation that logrolling will take place stabilizes the logrolling process. For this expectation to be stable, it must be symmetric, which means that revoting of issues must be possible. Since revoting is possible in institutions such as Congress, we conclude that an important set of real world voting bodies satisfies the conditions for stable logrolling.     

On the stability of legislative outcomes

This paper argues that by arranging vote trades in the face of information costs, legislative committees contribute to the stability of legislative outcomes. A structure of permanent committees and subcommittees facilitates informational specialization and helps legislators acquire experience in their specializations. Committees arrange vote trades by adjusting amounts of recommended spending on separate items in bills that receive majority support. Each legislator is allotted a roughly equal amount of legislative spending that he can influence plus an additional amount that depends on his skill and experience as a committee member.     

On the incentives to establish and play political rent-seeking games

Legislators will enact programs that encourage rent-seeking only if they can thereby increase their chances of winning election, or of receiving contributions themselves. The paper shows rent-seeking to be electorally robust — both voters and contributors will often avoid a candidate who proposes to eliminate rent-seeking. Important exceptions arise, however, if contributions are more likely to help challengers than incumbents, and if legislators prefer that some firm rather than another receive governmental contracts.I thank an anonymous referee, members of the Public Choice Study Group at UC Irvine, and Stergios Skaperdas for their comments.     

On disclosure policy in contests with stochastic entry

We study how a contest organizer who seeks to maximize participant effort should disclose the information on the actual number of contestants in an imperfectly discriminatory contest with stochastic entry. When each potential contestant has a fixed probability of entering the contest, the optimal disclosure policy depends crucially on the properties of the characteristic function H(?)=f(?)/f ^??(?), where f(?) is the impact function. The contest organizer prefers full disclosure (full concealment) if H(?) is strictly concave (strictly convex). However, the expected equilibrium effort is independent of the prevailing information disclosure policy if a linear H(?) (Tullock Contest) applies.     

The stability of stated preferences for public goods: Evidence from recent budget games

We have investigated the stability of the individual response in recent budget games based on survey data, which is an important requirement for the reliability of this instrument. Budget games have gained popularity due to the problems encountered with alternative methods to determine preferences for public goods, such as the analysis of actual public expenditure date using median-voter theory or similar approaches. The short-term test-retest correlations (within an interval of one month) turn out to be rather low, typical around 0.3. No explanation of the test-retest differences could be found from the usual socio-economic and political characteristics of the respondents or from information characteristics of the survey design. Also, the pattern of budget-game outcomes for different countries and different periods is rather similar. The cumulative evidence suggests that the survey response to budget games is generated to a large extent by very general notions on the (un)desirability of public goods: defence is bad, education and health care are good. This implies that outcomes are often not related to the actual level and structure of public expenditure or revenues. As a result, the individual responses, even to the more sophisticated budget games, are subject to large uncertainty margins. Our results should warn researchers and, even more important, policy makers against giving too much weight to stated preferences for public expenditure or taxation levels obtained from budget games. Of course, further research is needed to obtain the precise limits of the instrument, including laboratory experimental economics.     

On collective goods,private wealth,and the core solution of simple games with sidepayments

This essay identifies consequences for the core solution in a class of social decision problems concerning the provision of collective goods (or bads) if the rules are modified to permit sidepayments. In these problems, a kind of formal decision procedure that includes any weighted or unweighted majority rule governs only the decision about collective goods. Each decision about collective goods, however, implies a vector of the agents' endowments of private wealth that can, but need not, vary across the alternatives. Any agent may offer to make sidepayments from this endowment that are contingent on the collective goods decision, but the agent holds preferences that, given any fixed decision about collective goods, strictly increase in the agent's own wealth. The results indicate that the core's response to introducing the possibility of sidepayments depends on whether any agent possesses a veto over the collective goods decision. If no one has a veto, then an outcome belongs to the core of the game with sidepayments only if no sidepayment is made and the same decision about collective goods belongs to the core of the associated game without sidepayments. In this case, introducing the possibility of sidepayments does not bring a new collective goods decision into the core. Indeed, merely adding the possibility of sidepayments can cause the core to vanish. On the other hand, if at least one agent possesses a veto, then introducing sidepayments can (but need not) lead to a new core solution concerning the decision about collective goods. In any such new solution, at least one agent who has a veto — but no one who lacks it — receives a sidepayment.     

Involuntary defection in two-level games

Public Choice - Ratification failures are prevalent in international relations, but due to the assumption of unitary actors in international relations theory, theoretical analysis has been...     

Returns to effort in rent-seeking games

In the traditional formulation of rent-seeking games, increasing returns to effort are characterized by an exponent r>1. However, when the value of the rent is normalized to 1, the players’ effort levels A and B will typically be less than 1. Thus, when A<1 and r>1, the value of A ^r decreases as r increases, contradicting the interpretation of r>1 as representing increasing returns to effort. This apparent defect in the mathematization of the problem seems to suggest that a different interpretation of r is required whenever A<1, upsetting the uniformity and elegance of the model. In this short note, we demonstrate that the perceived problem is illusory, and that the usual interpretation of r is satisfactory for all values of A.     

Risk-aversion and prudence in rent-seeking games

This paper considers a common n-agent symmetric rent-seeking game. It derives conditions so that risk-aversion and risk always decrease rent-seeking efforts. These conditions hold for any regular contest success function when risk-averse rent-seekers are also prudent. Under n=2, prudence is a necessary and sufficient condition for risk-aversion to decrease rent-seeking efforts compared to risk-neutrality. An intuition for this result is given based on a self-protection model.     

Risk aversion in two-period rent-seeking games

This work analyzes a two-period rent-seeking game, with the aim of studying the effect of risk aversion on the optimal choices made by the rent-seekers. We first prove that the equilibrium in two-period rent-seeking games always is unique. The analysis also shows that more risk aversion reduces the investment in the rent-seeking game in a two-period framework without introducing the additional condition of prudence, required in one-period models. Similarly, the introduction of a risky rent, instead of a given rent, implies, in the two-period framework, a reduction in investment under the condition that the rent-seekers are risk averse. Moreover, with risk aversion, larger first-period wealth increases investment in the rent-seeking game and larger second-period wealth reduces it. When both first-period and second-period wealth increase, investment in the rent-seeking game declines if the rent-seeker is risk averse and imprudent. Lastly, when a risky level of second-period wealth is introduced, the rent-seeker increases (reduces) investment in the rent-seeking game if he is risk averse and prudent (imprudent).

     

Governance as a strategy in state-of-nature games

Public choice scholars routinely claim that coercion can be used to solve the social dilemma. However, while social contract theorists have frequently described state-of-nature societies using game theory, they have not used game theory to show how coercive action within such societies can improve outcomes. Here I operationalize the concepts of coercion and governance within a Prisoners’ Dilemma (PD) framework; governance is operationalized as coercion to compliance, and to adopt a coercive strategy is to impose a strategy choice upon another player. I show that, under certain conditions, adding governance strategies to a noncoercive one-shot PD game can improve outcomes.     

贫富差距影响社会稳定的三个因素

改革开放以来,我国在“让一部分人、一部分地区先富起来,逐步实现共同富裕”政策的指导下,社会各阶层总体生活水平有较大的提高,这是让世人瞩目的成就。但是,由于种种原因,也出现了收入差距拉大和贫富分化的问题,并为人们所关注。就目前的贫富差距对社会稳定构成的影响来说,要引起重视的主要是以下三个因素。     

A general analysis of rent-seeking games

In this paper we reconsider the basic model of “efficient rent seeking.” We stress the importance of the shape of the players' reaction curve in order to understand the impact of the technology of rent-seeking on the structure of the outcome of the game. We give a complete characterization of the pure strategy equilibria. Moreover, the possibility of preemption by a Stakelberg leader is discussed according to the nature of the technology of rent-seeking available to the agents.     

The strongly stable core in weighted voting games

The problems associated with the concept of the core in spatial voting games such as non-existence and instability are well documented. The structurally stable core, presented by Schofield, attempts to resolve these problems by looking at the subset of the core which is still nonempty after a small change in voter preferences. Although this concept, combined with the adoption of supramajoritarian voting rules and weighted voting games, may very well explain the observed stability in reality, it may not be suitable for certain coalition situations. This article proposes a new solution concept, the strongly stable core. The conditions for the existence and the potential location of the strongly stable core are then explored and compared with those of the structurally stable core.