Rent-seeking with non-identical sharing rules

The primary object of this paper is to examine the role of differential sharing rules within a collective rent-seeking setting on the possible non-existence of Nash equilibrium. Focusing on groups that distribute part of the rent equally among their members and the residual according to relative effort, we show that in rent-seeking societies applying the two polar sharing rules equilibrium never exists. In the general case where groups apply different but not necessarily the polar sharing rules, we study the relationship between group variability in distributing rents and the problem of non-existence of equilibrium in the rent-seeking game.     

Endogenous sharing rules in collective-group rent-seeking

This paper examines the possibility of endogenous determination of intra-group sharing rules in a collective-group rent-seeking game. Collective-group rent-seeking is considered as a two-stage Nash-Cournot game in which sharing rules are determined prior to individual decision on voluntary contribution. The solution is subgame perfect and is obtained by backward induction. In competition between two groups of the same size, the Nash equilibrium sharing rule of each group is to distribute rent to each according to relative effort. Total rent-seeking outlays in this case are equal to those obtained by Tullock (1980). When more than two groups compete for a rent, the sharing rule based on relative effort is again likely to be the Nash equilibrium strategy of each group. The amount of total rent-seeking outlays is also equal to that in Tullock (1980). In a nutshell, the rent is substantially dissipated if sharing rules are endogenously determined.     

The Effect of Number and Size of Interest Groups on Social Rent Dissipation

This paper develops two models of the lobbying of interest groups to examine the effect of the number and size of interest groups on rent dissipation. In cases where individuals ignore the effect of the lobbying activities on the rent size, the number of groups is negatively related to rent dissipation and there exists an inverse relation between the extent of egalitarianism of within-group rent sharing rules and the total rent dissipation in the symmetric setting. Model two examines the case where each individual in each group takes into account the effect of lobbying activities on the total “pie”, of which she/he competes for a share through within-group and between-group interaction. The relation between the number of symmetric groups and the total rent dissipation is shown to be an inverted “U”-shape, contrary to the conventional wisdom that holds a monotonous relation between the two variables.     

A general equilibrium model of two group conflict with endogenous intra-group sharing rules

This paper explores the interactions among intra-group sharing rules, the competition between two groups over the common pool of output, and the allocation of resources between productive and appropriate activities. In the interior solution, the use of egalitarian method for the distribution of group income among members plays no distributional role but only affects the allocation of resources. It releases resources into the productive sector from the group that adopts the egalitarian rule by making the internal conflict among the members less intense. The sequential choice of intra-group sharing rules and resource allocations produce the adoption of fully egalitarian intra-group sharing rules in both groups. These rules minimize the amount of resources allocated to appropriate activities and maximize the welfare level of all individuals in the economy. This result suggests that inter-group competition with the use of egalitarian principle in the distribution of group income among group members, which is not available to the Hobbesian state of nature, is one of the cheaper social devices in restraining individuals from engaging in costly appropriative activities.     

Policy-Motivated Candidates,Noisy Platforms,and Non-Robustness

This paper develops a model of a two-candidate election inwhich the candidates are mainly office-motivated but also tosome (arbitrarily small) extent policy-motivated, and theirchosen platforms are to some (arbitrarily small) extent noisy.The platforms' being noisy means that if a candidate haschosen a particular platform, the voter's perception is thatshe has, with positive probability, actually chosen some otherplatform. It is shown that (i) an equilibrium in which thecandidates play pure exists whether or not there is aCondorcet winner among the policy alternatives, and (ii) inthis equilibrium the candidates choose their own favoriteplatforms, which means that the platforms do not converge.     

Introducing “Cooperative Push”: How Inefficient Environmental Policy (Sometimes!) Protects the Global Commons Better

In this paper we argue that the incentive structures of the gamesnations play in international environmental negotiations dependupon the choice of environmental policy instruments. Bargainingon the use of some instrument (e.g. an effluent charge) mayput the players into a dilemma game (like Chicken). Negotiationsto apply a different instrument (say, an emission reductionquota) may lead to a cooperation game (like Stag Hunt). The higherthe incentive to cooperate in the type of game which is built upby a specific instrument, the higher is this instrument's``cooperative push''. Of course, comparing two instruments,the one with the higher cooperative push might well be the lessefficient one. In this Paper, we analyse a situation where thehigher cooperative push of an instrument overcompensates thisinstrument's lower efficiency: Aggregate welfare withbilateral cooperation (the equilibrium of Stag Hunt) is higher than withunilateral cooperation (the equilibrium of the Chicken game).The question remains whether sovereign countries decide to playStag Hunt ending up in the welfare superior equilibrium. It isshown below that they do not in an uncoordinated optimising setting.However, we develop a particular frame where the proposedsolution meets the criteria of individual rationality,stability and fairness. It thereby establishes the politically mostdesired result – international cooperation.     

Financing Homeland Security and Emergency Preparedness: Use of Interlocal Cost‐Sharing

Before this study, much of the research on interlocal collaboration has focused broadly on interlocal service agreements, of which interlocal cost‐sharing is but one dimension. This study is one of the first to examine the nature of interlocal cost‐sharing agreements for a specific (and critically important) functional area. A mail survey of Florida city and county finance officers finds that the most common interlocal cost‐sharing partnership is between local general purpose governments rather than with local special purpose governments. The strongest incentives for interlocal cost‐sharing are (1) inadequate funding for emergency management in a jurisdiction's capital budget, (2) the perceived inadequacy of federal and/or state homeland security funding, and (3) greater faith in horizontal (local‐to‐local) than vertical (federal‐state‐local) intergovernmental agreements. The research also highlights the importance of asking fiscal condition survey questions in a more functionally specific manner rather than as an “overall fiscal condition” question.     

The solution to the Tullock rent-seeking game when R>2: Mixed-strategy equilibria and mean dissipation rates

In Tullock's rent-seeking model, the probability a player wins the game depends on expenditures raised to the power R. We show that a symmetric mixed-strategy Nash equilibrium exists when R>2, and that overdissipation of rents does not arise in any Nash equilibrium. We derive a tight lower bound on the level of rent dissipation that arises in a symmetric equilibrium when the strategy space is discrete, and show that full rent dissipation occurs when the strategy space is continuous. Our results are shown to be consistent with recent experimental evidence on the dissipation of rents.     

Policy‐Specific Information and Informal Agenda Power

In Gilligan and Krehbiel's models of procedural choice in legislatures, a committee exerts costly effort to acquire private information about an unknown state of the world. Subsequent work on expertise, delegation, and lobbying has largely followed this approach. In contrast, we develop a model of information as policy valence. We use our model to analyze a procedural choice game, focusing on the effect of transferability, i.e., the extent to which information acquired to implement one policy option can be used to implement a different policy option. We find that when information is transferable, as in Gilligan and Krehbiel's models, closed rules can induce committee specialization. However, when information is policy‐specific, open rules are actually superior for inducing specialization. The reason for this surprising result is that a committee lacking formal agenda power has a greater incentive to exercise informal agenda power by exerting costly effort to generate high‐valence legislation.     

Lobbying and asymmetric information

Informational lobbying — the use by interest groups of their (alleged) expertise or private information on matters of importance for policymakers in an attempt to persuade them to implement particular policies — is often regarded as an important means of influence. This paper analyzes this phenomenon in a game setting. On the one hand, the interest group is assumed to have private information which is relevant to the policymaker, whilst, on the other hand, the policymaker is assumed to be fully aware of the strategic incentives of the interest group to (mis)report or conceal its private information. It is shown that in a setting of partially conflicting interests a rationale for informational lobbying can only exist if messages bear a cost to the interest group and if the group's preferences carry information in the ‘right direction’. Furthermore, it is shown that it is not the content of the message as such, but rather the characteristics of the interest group that induces potential changes in the policymaker's behavior. In addition, the model reveals some interesting results on the relation between, on the one hand, the occurrence and impact of lobbying and, on the other hand, the cost of lobbying, the stake which an interest group has in persuading the policymaker, the similarity between the policymaker's and the group's preferences, and the initial beliefs of the policymaker. Moreover, we relate the results to some empirical findings on lobbying. qu]Much of the pressure placed upon government and its agencies takes the form of freely provided “objective” studies showing the important outcomes to be expected from the enactment of particular policies (Bartlett, 1973: 133, his quotation marks). qu]The analysis here is vague. What is needed is an equilibrium model in which lobbying activities have influence. Incomplete information ought to be the key to building such a model that would explain why lobbying occurs (information, collusion with decision makers, and so on) and whether lobbying expenses are socially wasteful. (Tirole, 1989: Ch. 1.3, p. 77, Rentseeking behavior).     

A mirror of the ethnic divide: Interest group pillarization and elite dominance in Bosnia and Herzegovina

To date, there is no comprehensive treatment of interests and interest groups in Bosnia and Herzegovina (BiH). This article seeks to fill that gap. It does so by explaining that interest groups reflect the country's complex political system with multiple levels of power sharing along societal cleavages. Political parties are the major power centers, and the link between ethnicity and party allegiance is most significant in defining the role of interest groups. The result is a pillarized (separate, intragroup) and bifurcated group system with 3 separate interest group subsystems with little interchange between them. This fragmentation has been challenged by international institutional organizations promoting multiethnic interests. Nevertheless, with the persistence of many informal interests, the group system is stymied in moving toward an integrated system, a development that is key to strengthening BiH's consociational democracy.     

Comfortably inhabiting reality: justifying and denouncing arguments in a development dispute in the post-industrial gentrified inner-city

This article seeks to understand the ‘critical capacities’ of actors involved in public disputes by focussing on one such case in Melbourne, Australia. The dispute centred on a non-government school's proposal to develop classrooms in a heritage listed building on public land sublet from a charitable foundation. Following local council's rejection of the original proposal, the school successfully appealed to the Victorian Planning Minister. After introducing a critical pragmatic analytic framework, five accounts of the dispute given by key actors are examined, uncovering similarities in the arguments used by each. Then, in the same accounts, analysis identifies differences in how the pro- and anti-development groups justified their own and denounced their opponents' positions. Both groups recognised formal rules as the best means for preserving equal citizens' access to public space, yet the pro-development group justified their argument by reference to local community benefit, in contrast with the anti-development group, who adopted an abstract argument concerning the privatisation of public space. Understood as mobilising different ‘models of justice’, the groups are regarded as appealing to a ‘real’ order, an implicit politicised hierarchy that situates winners in relation to losers. In effect, the pro-development group justified its position by representing it as congruent with, rather than disrupting, the real order encompassing the situation. In conclusion, the paper discusses the usefulness of the critical pragmatic analytic framework for understanding governmental power relations and assemblages, as actors demonstrate their critical capacities in contexts where erstwhile formal equality obscures the presence of hierarchical order.     

The Language of Race

The 1991 Census form for households in Great Britain included, for the first time, a question about ethnic group. The question had nine boxes, eight for named ethnic groups and one for 'any other'. One box had to be ticked for each member of the household. Brian Klug discusses his own reaction to the (so-called) ethnic question, and explains why, as a Jew of European extraction, he did not tick the box marked White. He examines several issues raised by the ethnic question, including the following: why this question is different from other questions on the form; the definition and use of the words 'racial' and 'ethnic'; the vocabulary of colour ('black', 'white' etc.) in the language of race; the idea that 'white' is an ethnic category; the claim that the ethnic question is an instrument for combatting racism; one proposal for improving the question by removing the 'racial' components in the categories.     

Institutional Change and Embeddedness: Caste and Gender in Financial Cooperatives in Rural India

ABSTRACT

This article examines the interaction between institutional change and caste and gender embeddedness. It develops a framework for understanding how this interaction takes place. The article presents data on the results of an effort by a non-profit development organization, the Cooperative Development Foundation (CDF), to promote women's cooperatives, grounded in the ideas of mutual self-help and equitable access to services, in rural Andhra Pradesh in India. Using a simple theoretical framework that highlights the multi-level nature of institutional change, and the potential for interactions with embeddedness at one level to affect interactions at other levels, the article presents data showing how particular institutional rules of the cooperatives interacted with caste and gender to shape the overall governance and service delivery practices of these new organizations. In particular, after failed attempts to integrate existing, male-dominated cooperatives with women, the CDF created gender-segregated cooperatives. Data from the women's cooperatives show the creation of mixed-caste organizations, with boards of directors that were fairly representative of their membership, but with presidents that were more likely to be from the higher-castes. Access to financial services shows little caste bias, though lending is through caste-based peer groups. The data suggest that the interaction of embeddedness and institutional change is a process contingent on: a) the strategy taken by the development organization towards embeddedness; b) the nature of the institutional change itself relative to the existing social structure; and c) the effects the interactions between institutional change and embeddedness at different levels have on each other.     

A contest success function with a tractable noise parameter

I propose a simple contest success function which is a variant of the Tullock probability function under certain conditions. It relaxes two features of the Tullock probability function. I show that this contest success function could be used to obtain interesting results and is more tractable than Tullock's function in certain cases. In particular, researchers who are interested in examining the degree to which luck as opposed to effort affects behavior in different contest settings might find it easier to use this contest success function than the Tullock success function. Unlike the Tullock function, there always exists a pure-strategy equilibrium for all values of the parameter which captures the degree of noise. The proposed function has been used in Kolmar and Wagener (2004) with interesting results.     

Rational benevolence in small committees

We consider a game in which three committee members must divide up a benefit among themselves. In response to the large literature on sequential procedures in this type of game, we propose an institution that is inspired by auction theory. The (sealed) bids of the players are proposals for a distribution of the benefit and are given simultaneously. If any of the bids is preferred to all others in a pairwise comparison (i.e., a Condorcet winner exists) then this proposal is implemented. If such a bid does not exist then an equal split of the benefit is assumed. An equilibrium of this game is for each player to suggest that one of the opponents should receive the lion’s share of the benefit, even though each player cares only about his own share. We call this phenomenon “rational benevolence”. Although the end that is desired by the players is purely egoistic, the means of achieving it may be perceived as benevolent. Several applications of the game are suggested.     

A general constitutional possibility theorem

Arrow's Impossibility Theorem shows that there exist no transitive social preferences in nonoligarchic societies for all possible profiles of individual preference orderings. Similarly, a generalization of Sen's Theorem of the Impossibility of a Paretian Liberal implies under the same conditions that non-Pareto-optimal outcomes may be present in the resulting cyclical preference relations. This essay changes the customary perspective. It demonstrates that, for any profile of individual preferences, we can always find a nonoligarchic assignment of rights to different subsets of society, to decide between pairs of outcomes, together with adequate decision rules, which escapes these problems. This assignment of rights can be a purely liberal one even for each profile, but not one in which everybody participates in all decisions and which uses simple or qualified-majority voting (Total Direct Democracy). The adequate purely liberal constitution, on the other hand, may imply an oligarchy if too few outcomes are present.     

Retrospective Voting and Political Representation

This article develops a theoretical model of political representation under the single-member district system. I establish the existence of equilibria in which legislative voting of each legislator depends only on her preference and her electorate's preference and voters sanction badly behaved incumbents and retain well-behaved ones based solely on their own representatives' roll-call records. In equilibrium, voters achieve a partial representation with respect to representatives' behavior in each district. However, with respect to representation of the social majority, my findings are indeterminate. On the one hand, there exists an equilibrium in which the majority-preferred alternative is the outcome guaranteed, except in very special circumstances. On the other hand, this equilibrium is not generally the unique equilibrium, and, for some parameter values, there is an equilibrium in which the majority-preferred alternative is less likely than the alternative preferred only by the minority to be the outcome.     

Valence and Campaigns

We present a model of two‐candidate elections in which candidates are office‐motivated, campaigning is voluntary and costly, and one candidate has a valence advantage. In equilibrium, the order of campaign announcements matters: Each candidate would prefer to announce his or her position after the other candidate has announced his or hers. The fundamental predictions of the model are (1) the impact of valence and campaigning costs on candidates' equilibrium behaviors is in general ambiguous, requiring further specification of the details of the electoral situation, and (2) in general, equilibrium platform announcements are essentially independent of the location of the median voter's ideal point. In addition, the model is consistent with elections in which both, only one, or neither candidate actively campaigns, and, finally, even when one candidate has a large valence advantage, there might be no equilibrium in which he or she will win the election with certainty.     

Israel's violated republican equation

Historically, Israel's ability to sustain a situation of armed conflict for a long time was predicated on the republican equation in which the dominant group – the secular Ashkenazim – exchanged military sacrifice for social dominance. Nonetheless, an imbalance between military burden and social rewards, which emerged during the 1970s and1980s, led the middle-class Ashkenazim to undertake collective action aimed at reducing the burden of military service through protest and peace movements, along with more individual tactics. These modes of action, together with the attenuated status of the military, spurred on national-religious and Mizrachi groups to integrate themselves into the traditional equation, or to formulate an alternative one (the Gush Emunim and the Orthodox route). Arguably, the status of each group in the military, which itself saw an erosion in its social status, played a major part in shaping the nature, scope and strategy of each group's collective actions. The groups capitalized on the opportunities that the military offered them in accordance with their capacity to utilize the resources they had at their disposal.