Committees and Rent-Seeking Effort under Probabilistic Voting

Congleton (1984) shows that a rent awardedby a committee results in smaller aggregaterent-seeking expenditures than a similarrent awarded by a single administrator.This note modifies Congleton's model byconsidering a model in which voting isprobabilistic instead of deterministic. Ishow that the relative magnitudes ofrent-seeking expenditures could go eitherway depending on the relative weightedsensitivities (to rent-seeking efforts) ofthe committee and the single administrator.I show how the distribution of votingpowers of committee members affectsrent-seeking efforts. I also examine thecase where there is some probability thatthe rent may not be awarded, if thecommittee is unable to reach a majoritydecision. My results diverge from Congleton(1984) because of the absence ofmajoritarian cycles in my model.     

The design of rent-seeking competitions: Committees,preliminary and final contests

The paper examines the common practice in multi-contest rent- seeking competitions, where “finalists” are selected, based on rent-seekers' efforts in a preliminary contest. We find that for any single-contest design, rent-seeking expenditures could be reduced by introducing a preliminary contest, if the marginal returns to rent- seeking effort in the preliminary contest is sufficiently low. In addition to other reasons, the paper argues that this may explain why such multi-contest designs are common. We argue that rent-seeking expenditure in the preliminary stage represents the cost of reducing the number of contestants. We also find that the practice of setting a higher “quality” standard in the final contest than the “quality” standard in the preliminary contest reduces rent-seeking waste. We derive an expression for the optimal number of finalists; under certain conditions we find that the optimal number of finalists is directly proportional or equal to the square root of the number of potential contestants. Finally, we show that whether rent-seeking expenditures rise or fall when the rent is awarded by a committee instead of a single administrator depends on the sensitivity of the committee relative to that of the single administrator.     

The All-Pay Auction When a Committee Awards the Prize

There is very little work on the equilibrium of the all-payauction when the prize is awarded by two or more people. Iconsider an all-pay auction under committee administrationwith caps on the bids of the contestants. I show that for anynumber of committee members and contestants, there exists apure-strategy equilibrium in which the contestants bid anamount equal to a suitably chosen cap. I argue that the cap isnot an artificial restriction on the game, given that thereare caps on political lobbying in the real world. I find thatcommittee administration could result in higher aggregateexpenditures, even if there is some probability that thecommittee will not award the prize. The intuition for thisresult is that the inclusion of additional administratorsrelaxes the effect of caps on lobbying. That is, caps onlobbying tend to be more effective the smaller is the size ofthe committee. Caps may also be a solution to the problem ofmajoritarian cycles in all-pay auctions under committeeadministration.     

Selecting Committees

In selecting a committee, voters are often concerned with the over all composition of the committee rather than simply selecting a single individual as their representative. We give two examples of elections at Wheaton College in Massachusetts that illustrate the complexity of preferences that voters may have for the relationships among the individual candidates. These preferences cannot be separated into preferences on the individual candidates and are not detectable from only a voter's top-ranked committee. We outline the questions this raises for the design of committee elections in general and propose directions for future work.     

When evaluators disagree: Perplexities and perspectives

It is often held that one function served by evaluation in the fields of education and social policy generally is to assist the administrator in the making of rational decisions. If, under these circumstances, several evaluators come to different conclusions about a research proposal or a pilot social program, on what basis can the administrator make his decision? He can hardly be expected to resolve any technical dispute between the experts who are his advisors. After discussing the various functions of the evaluation process, and analyzing some of the factors that may lead to such lack of consensus amongst experts, the paper recommends that if the administrator is concerned solely with making a rationally defensible decision, then he should select his evaluating panel so that all members share the same theoretical orientation.     

The demand for local government goods

Abstract. This paper analyses the spending preferences of local government elected politicians. It is argued that the median voter model is inappropriate in multi-party systems that provide multiple government services, and that the preferences of the representatives are consequential to local resource allocation. We develop a micromodel in which service demand is conditioned by exogenous public revenue, prices, and demographic factors. We hypothesise that politicians demands are affected by party affiliation, public sector occupation and committee assignment. The estimates of the micro demand functions are based on data pertaining to Norwegian local governments. It is found that the estimated income elasticities correspond approximately with elasticities of output studies. Party affiliation has an impact on demand patterns, while government occupation and committee appointment are major determinants of politicians desired allocation of public services. Further analyses reveal that the numerical strength of parties impacts weakly on the actual service allocation, whereas the representation of government employees has occasional effect. The budgetary allocations are imperfect expressions of the elected council's underlying preferences.     

Rent seekers who demand government production: Bureaucratic output and the price of complements

Many goods and services produced by government bureaus are sold at prices which do not maximize net revenues (maximize profits or minimize losses). Indeed, bureaucratic institutions typically create incentives to expand production beyond that which would maximize net revenues. Furthermore, many of the products sold by government bureaus are highly complementary to privately produced goods and services. If a bureau's output is not priced to maximize net revenues, then private sellers of various complements may be in a position to extract rents by adjusting their prices. This paper explores the implications of bureaucratically generated rents for privately produced complements. First, rent seeking can materialize when private sector interests apply pressure for expanded bureau production and lower bureau prices. Second, if the bureau does expand its production capacity beyond the net revenue maximizing level, and if a private producer obtains exclusive rights to supply complements, then the extraction of rents will result in an inefficient mix of resources in bureaucratic production. The basis of the inefficiency is not the reason often given, however. Rather, inefficiencies arise because the actual level of use is less than that which the ‘bureaucratic plant’ was constructed to produce due to the relatively high price of the complementary services.     

The incumbency dilemma and rent extraction by legislators

An incumbent is able to shirk or otherwise obtain rents based on his tenure of office because more senior representatives are better able to advance their legislative agendas than are more junior members. The realization of incumbent rents implies that an electoral prisoners' dilemma occurs at the level of voters across electoral districts. Pivotal voters in each district would benefit if all incumbents were replaced by challengers with similar legislative programs because the cost of incumbent rents can be avoided, but each benefits if his representative has more seniority than those from other districts.     

Outsourcing in contests

We study ex post outsourcing of production in an imperfectly discriminating contest, interpreted here as a research tournament or a procurement contest for being awarded some production contract. We find that the possibility of outsourcing increases competition between the contestants, leading to higher total contest effort, if the contest winner is expected to obtain a sufficiently large share of ex post outsourcing rents. Under reasonable assumptions, outsourcing tends also to increase the number of active contestants, strengthening the case for outsourcing to increase total contest effort. If such effort is socially wasteful, outsourcing creates a welfare trade-off between ex ante and ex post efficiency.     

Monopoly rent seeking under conditions of uncertainty

In recent years, economists have come to recognize that the competition to obtain monopoly rents, i.e., rent seeking, may consume resources whose value greatly exceeds that associated with traditionally measured deadweight welfare loss triangles (Tollison, 1982). Early articles by Tullock (1967), Krueger (1974), and Posner (1975) all concluded that this competition would exactly dissipate the rents sought. Later articles by Tullock (1980) and Baysinger and Tollison (1980) modified that original conclusion. The present paper develops a model which raises further doubts about the complete transformation of rents into costs. The emphasis of the analytical framework presented is on the implications of the fact that rent seekers may typically be uncertain about being able to maintain a monopoly position even if they are initially successful in attaining one. It is demonstrated that when there is even a moderate level of uncertainty about retention, the likely effect will be a relatively large reduction in the magnitude of resources invested in rent seeking activities. In addition, it is shown that the size of this waste of resources depends somewhat on the extent to which rent seeking opportunities involve once and for all transfers as opposed to flows of rents. Finally, in those cases where a flow of rents is at stake, it is shown that considerable social waste might be eliminated through institutional changes which would reduce the subjective probabilities of potential monopolists retaining their rent streams once attained.     

Crafting consensus

The paper analyzes the problem of a committee chair using favors at her disposal to maximize the likelihood that her proposal gains committee support. The favors increase the probability of a given member approving the chair’s proposal via a smooth voting function. The decision-making protocol is any quota voting rule. The paper characterizes the optimal allocation of any given level of favors and the optimal expenditure-minimizing level of favors. The optimal allocation divides favors uniformly among a coalition of the committee members. At a low level of favors, the coalition comprises all committee members. At a high level, it is the minimum winning coalition. The optimal expenditure level guarantees the chair certain support of the minimum winning coalition if favors are abundant and uncertain support of all committee members if favors are scarce; elitist or egalitarian committees are compatible with a strategic chair. The results are robust to changing the chair’s objectives and to alternative voting functions, and reconcile theoretical predictions with empirical observations about legislative bargaining experiments, lobby vote buying and executive lawmaking.     

Within‐party Allocation of Committee Seats: Evidence from Danish Local Elections

This article examines two traditional and four new explanations of committee composition. Using survey data on 541 Danish local politicians' pre‐election committee seat preferences and their actual post‐election committee seats, it is found that politicians are more likely to have their committee seat preferences fulfilled the less their preferences for the committees' policy domains differ from those of their fellow party members and the more specialised they are within the jurisdiction area of their preferred committee. Thus, the ex ante control of committee members sometimes observed in the American context is also relevant in the very different institutional setting of Danish local government. Moreover, a number of other explanations are found to be of equal relevance. In particular, individual‐level popular support is important to politicians' committee seat preference fulfilment and seats are distributed among party members in order to assure that everybody, at least to some extent, obtains a post that they find attractive. The findings thus suggest that ex ante control of committee members is but one of many concerns of parties. Accordingly, scholars should broaden their attention to other aspects of committee seat allocation, such as fair share norms and the popular support of politicians.     

Committee choice and the core under supramajority rule: Results from simulation of majority choice in 2-dimensional space

While simple-majority choice by committees is generally unstable, supramajority rule has been demonstrated to yield nonempty sets of stable outcomes: outcomes in the core. This paper reports results of a computer simulation of majority choice by committees under supramajority rule. The object is to explore the transition from unstable to stable committee choice with increasing supramajority rules. The findings are that supramajority rule limits the instability of committee choice; that stable committee choice is no more predictable than unstable committee choice; and that an optimal supramajority rule can be specified which minimizes instability and maximizes the predictability of committee choice. In all of the results, simple-majority rule plays virtually no role.     

Social Heterogeneity and Optimal Mix Between Public and Private Provision of Public Goods

With a framework of incomplete contract, this paper shows that for provision of public goods such as medicare and education, pure privatization may not promote competition. On the contrary, the co-existence of public and private provision may enhance de facto competition. Two competitive effects are identified. When consumers are heterogeneous, the co-existence of public and private ownership gives consumers freedom to choose from different ownership, improving allocation efficiency (Tiebout effect). While consumers are homogeneous, the co-existence can promote yardstick competition, squeezing out information rents from both ownerships, improving production efficiency (benchmarking effect). In either case, the co-existence dominates unique ownership. The paper ends up with some implications for China.s medicare and education reforms. Yongqin Wang is an assistant professor at China Center for Economic Studies, Fudan University and Haibo Xu is a M.A. student in economics at the same center. We thank Te Bao, Zhao Chen, Sujian Guo, Ming Lu, Yew-Kwang Ng and Teague Savitch, and anonymous reviewers for valuable comments.     

Committee bias in legislatures with a high degree of party cohesion: Evidence from Danish municipalities

The institution of committees in democratic legislatures has for years been said to bias policy making because the preferences of committee members differ from, and are more alike than, those of other legislators due to self‐selection to the committees. Based on an analysis of United States Senate committees, Hall and Grofman suggested in 1990 that the preferences of committee members primarily diverge from, and are more alike than, those of non‐committee members on policy issues that are salient to constituencies or at least to an easily definable segment of constituencies. This article argues that the logic of Hall and Grofman should in fact be reversed in legislatures characterised by highly cohesive parties. Accordingly, the main hypothesis is that in such legislatures the preferences of committee members are more likely to be alike than those of non‐committee members in the committees that work with policy issues of less salience to constituencies. Using a large‐scale comparative design comprising data collected in 2008 on the spending preferences of 1,348 Danish local politicians, evidence is found supporting this hypothesis. This finding points to the importance of considering the role of parties when assessing committee bias.     

Laffer paradox, Leviathan, and political contest

This paper considers a political contest model wherein self-interested politicians seek rents from the public budget, while general voters make political efforts to protest against politicians’ rent seeking directly (for example, through voting in referendums such as the passage of Proposition?13) or indirectly (for example, through donating money to organized groups such as the National Taxpayer Union). We show that the political contest may ironically lead to the Laffer paradox; that is, rent-seeking politicians may intend to set the tax rate higher than the revenue-maximizing rate. For taming Leviathans, political protests may not be as effective as competition among governments.     

Points for Place: Can State Governments Shape Siting Patterns of Low-Income Housing Tax Credit Developments?

There is considerable controversy about the allocation of Low-Income Housing Tax Credits (LIHTC). Some charge that credits are disproportionately allocated to developments in poor, minority neighborhoods without additional investments and thereby reinforcing patterns of poverty concentration and racial segregation. We examine whether Qualified Allocation Plans, which outline the selection criteria states use when awarding credits, can serve as an effective tool for directing credits to higher opportunity neighborhoods (or neighborhoods that offer a rich set of resources, such as high-performing schools and access to jobs) for states wishing to do so. To answer this question, we study changes in the location criteria outlined in allocation plans for 20 different states across the country between 2002 and 2010, and observe the degree to which those modifications are associated with changes in the poverty rates and racial composition of the neighborhoods where developments awarded tax credits are located. We find evidence that changes to allocation plans that prioritize higher opportunity neighborhoods are associated with increases in the share of credits allocated to housing units in lower poverty neighborhoods and reductions in the share allocated to those in predominantly minority neighborhoods. This analysis provides the first source of empirical evidence that state allocation plans can shape LIHTC siting patterns.     

Human capital,committee power and legislative outcomes

This paper presents a model in which legislators use informational asymmetries to engage in rent-seeking behavior. Previous work in the informational and distributive traditions could not explain deviations from the median preference without reference to “committee power”. Integration of these forces demonstrated that legislative outcomes need not correspond to the median preference regardless of the extent to which committee power is present in a legislature. While deviations from the median preference are consistent with committee power, recent empirical evidence suggests that observed deviations in Congress are in fact caused by human capital differentials rather than committee power.     

The reciprocal relationship between state defense interest and committee representation in Congress

Does prior representation of a state on a Congressional defense committee lead to higher levels of per capita defense contracts, or do higher levels of prior per capita contract awards to a state increase its probability of being represented on a defense committee? To solve this puzzle, we estimate a cross-lagged three-equation model on data from all 50 states from 1963 to 1989 using maximum likelihood within LISREL. We find a substantial reciprocal but non-confounding relationship between representation and the allocation of benefits for the House, but not for the Senate. Thus, for the House, this more appropriate model of distributive politics in Congress supports both the committee-induced benefits hypothesis and the recruitment hypothesis. Further, the paper elaborates on how this reciprocal relationship plays out over time.

     

Susceptibility to coalitional strategic sponsoring

It usually happens that the alternatives to be voted on in committees are chosen or sponsored by some particularly active committee members. For example, in parliaments, some representatives and some government members are known to be especially active in introducing bills on which the whole committee will later vote. It appears that parliamentary agendas—namely amendment and successive elimination voting rules—are vulnerable to strategic behavior by groups of individuals introducing motions which are not their most preferred alternatives. Our aim in this paper is to evaluate how frequently this type of behavior arises.