Public debt stabilization: the relevance of policymakers’ time horizons

Policymakers are stuck in time. Political short-termism, policy myopia, policy short-sightedness, and similar words have been coined to emphasize the present-centric policy thinking. Politics tends to produce short time horizons, and as a result, policymakers often fail to use present opportunities to mitigate future harms. Focusing on fiscal and monetary strategic interactions, given different separate decision makers, our paper aims to explore the effects of policymakers’ time horizons on debt stabilization. To formalize our ideas, we use the novel concept of Nonlinear-model-predictive-control Feedback Nash Equilibrium (NFNE) and find that present-centric policy thinking and decision horizons matters under several dimensions.     

The issue of instability in a simple policy game between the central bank and a representative union

In the recent economic literature the independence of the central bank is often considered to be one of the most effective guarantees to achieve price stability. A strong theoretical basis for this proposition is that the monetary policy delegation given to an independent central bank is an optimal instrument to avoid the time inconsistency problem of monetary policy. This paper investigates the stability properties of this solution in a simple game in which the private sector (i.e. the trade unions) and the public sector (i.e. the central bank) simultaneously interact. A representative monopoly union is considered, and – in line with the recent economic debate – two types of unions are investigated: (i) the standard micro-founded trade union; (ii) the inflation-averse trade union. In both cases, we find that the requirement for the Nash equilibrium to be stable imposes a limit to the conservativeness of the central bank. Instability of the Nash equilibrium reveals a strategic co-ordination failure between the public and the private sector.     

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.     

Lindahl mechanisms and free riders

Several authors have proposed mechanisms whose Nash-equilibria yield Lindahl tax allocations; however, as is well known, so does the Lindahl procedure with an auctioneer. Moreover, the game forms of all these mechanisms, and of any as yet undiscovered such mechanism, all have the same normal form as does the Lindahl procedure without an auctioneer. The manipulative Nash equilibria are consequently the same for all these mechanisms, so that all have the traditional free-rider problem and all have the same outcome under strategic behavior.     

Tullock's rent-seeking contest with a minimum expenditure requirement

We consider a rent-seeking contest of the kind introduced by Tullock (1980) in which two players compete for a monopoly rent. We extend the contest by requiring that if a player puts forward an effort, his expenditures must be larger than or equal to some minimum level. We show that, depending on the model parameters, the number of Nash equilibria of the extended model can be zero, one, two or four. Furthermore, it turns out that the extent of rent dissipation in a Nash equilibrium of the extended model can be larger than, equal to, or smaller than the extent of rent dissipation in the unique Nash equilibrium of the original model.     

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.     

The power of international criminal courts: Strategic behavior and accountability networks

International criminal courts are often given mandates without the authority or resources to enforce those directives. Given this, how do they achieve their objectives? We argue that in the case of the International Criminal Tribunal for the former Yugoslavia (ICTY), the court strategically developed an accountability network comprised of governmental and nongovernmental actors, using its expertise and position to provide information and a framework of accountability. Simultaneously, it reached out to a range of actors to ensure that governments and international organizations would push Balkan states to cooperate with the ICTY, thereby amplifying the court's power. Utilizing correspondence data, we create a unique dataset that traces the development of this accountability network, demonstrating how this institution engaged networks to pursue its goals. In general, we demonstrate that, although institutions may lack compulsory power, they can engage in strategic behavior using networks to project their productive power.     

Evolutionarily stable preferences in contests

We define an indirect evolutionary approach formally and apply it to (Tullock) contests. While it is known that the direct evolutionary approach in the form of finite population ESS yields more aggressive behavior than in Nash equilibrium, it is now shown that the indirect evolutionary approach yields the same more aggressive behavior, too. This holds for any population size N, if the evolution of preferences is determined by behavior in two-player contests. The evolutionarily stable preferences (ESP) of the indirect approach turn out to be negatively interdependent, thereby “rationalizing” the more aggressive behavior.     

Lobbying the state or the market? A framework to study civil society organizations’ strategic behavior

This article lays out a framework for the conditions under which a civil society organization lobbies the state and when it turns to the market. This strategic choice cannot be understood solely from within current frameworks of lobbying strategies; insights from interest group studies must be complemented with the social movement literature's understanding of market‐based strategies. We build an overarching framework by extending the inside and outside lobbying dichotomy to include strategies that target the market. We also argue that it is crucial to understand the relations between both lobbying venues, as their relative power affects the choice not only between inside or outside lobbying, but also between the state or the market. The result is a richer framework more suited to capture the breadth of contemporary civil society organization lobbying behavior and, more importantly, to facilitate the comparative assessment of different strategic choices in future empirical research.     

Organizational variables and contribution behavior of large PACs: A longitudinal analysis

Although there has been a good deal of research on PAC contribution behavior, to date there has been no effort to systematically evaluate the impact of various organizational characteristics of PACs on their contribution behavior over time. Using data from a newly released longitudinal file from the Federal Election Commission, I examine the impact of organizational variables on the contribution behavior of large PACs in three election cycles, and on changes in contribution behavior between these elections. I find that PAC type, size, age, and the presence of a Washington office are all important determinants of PAC contributions. Changes in organizational characteristics, particularly growth in revenues, are weakly related to change in contribution behavior, which seems to be primarily a response to changes in the strategic environment.     

Preemptive and reactive spending in U.S. House races

This paper examines the spending behavior of candidates for the U.S. House of Representatives. Particular attention is paid to the timing of receipts and expenditures over the complete 2-year election cycle. Incumbents raise and spend large amounts of money very early in the race, and this preemptive spending may have a great impact on the selection of challengers and therefore on electoral outcomes. In addition, a model of reactive spending is tested for the general election period. Incumbents' expenditures are a function of the underlying partisan division in the district, the strength of the challenge, and candidates' feelings of vulnerability. Incumbents are strategic actors who attempt to maximize their chances of reelection. Early in the term, they spend preemptively in an effort to influence the selection of their challengers. Later in the term, they spend in reaction to the strength of their challengers' campaign. The role of money in congressional campaigns is neither simple nor direct. More attention needs to be given to the strategic uses of money in the period leading up to the general election campaign as well as to the dynamics of receipts and expenditures over an entire election cycle.     

Rent-seeking with asymmetric valuations

This paper analyzes Tullock's rent-seeking game with asymmetric valuations for a variable range of the returns to scale parameter. A necessary and sufficient condition for a unique pure strategy Nash equilibrium is established. Equilibrium effort and expected profits are determined and subjected to comparative statics analysis. Increasing the underdog's valuation induces both players to increase their efforts. Increasing the favorite's valuation increases his effort but decreases the effort of the underdog. Expected profits increase with a player's valuation but decreases with the valuation of the competitor. The impact of the returns to scale parameter is also analyzed.     

Reexamining efficient rent-seeking in laboratory markets

Given Millner and Pratt's (1989) finding of behavior inconsistent with theory, we reexamine efficient rent-seeking in experimental markets. We show that (a) when r = 3, no Nash equilibrium exists and therefore behavior has no theoretical benchmark to judge consistency, and (b) when r = 1, with a new experimental design utilizing an explicit expected payoff matrix, rent-seeking behavior is consistent with both Nash equilibrium and dissipation hypotheses.The authors gratefully acknowledge the financial support of The John A. Walker College of Business, Appalachian State University. Cliff Nowell provided generous advice. John Willingham supplied valuable research assistance. Michael Pratt and Gordon Tullock provided helpful comments on an earlier version of the paper.     

Do Participants and Observers Assess Intentions Differently During Bargaining and Conflict?

Political actors in conflict settings are often uncertain about their counterparts' intentions. This article explores the psychology of how intentions are assessed using a novel experimental design that randomly assigns subjects to one of three roles—"proposer,""recipient," or "observer." Recipients and observers are given identical noisy information about proposers' actions, and make postplay assessments of proposers' intentions that are rewarded based on accuracy. A first experiment explores a context of ambiguity, while a second experiment explores a context of uncertainty . The results suggest that actors' perceptions can sometimes be directly affected by the set of strategic alternatives they possess. When signals about proposer behavior appear "negative," recipients' assessments of proposers' intentions are more negative than observers' assessments if recipients have the ability to respond to the proposer's action—but not if recipients lack this ability. The ability to respond to proposer behavior appears to cause recipients to make more negative inferences about the proposer than circumstances warrant. Interestingly, recipients' and observers' assessments are indistinguishable when signals about proposer behavior instead appear "positive."     

Systematic objective setting for effective issue management

• While a great deal of academic and practitioner effort has been devoted to understanding and formalizing objective setting in corporate strategic planning and in strategic communication, far less effort has been committed to objective setting for issue management. Within this context, setting a proper objective is sometimes swept aside in the ‘rush for results’ and, as a consequence, issue management efforts can be misdirected, misapplied and poorly evaluated. Objective setting for issue management has unique requirements which distinguish it from broader corporate planning processes, and this paper develops a rationale and proposes specific guidelines to help to establish strategic objectives for effective issue management.

Copyright © 2005 John Wiley & Sons, Ltd.     

Conceptualizing Politics: Strategic or Communicative Action?

Following the "behavioral revolution" in the social sciences, analyzing political behavior as strategic action has become a dominant paradigm in political science. However, many political processes become incomprehensible from a purely strategic angle. Only a concept of politics as communicative action can explain how people reach mutual agreements on factual and normative matters. Some analysts seem to assume that whenever actors take a position in a debate that coincides with their own interest, the employed arguments must be understood as a strategic device to promote this self-interest But this explanation in most cases seems too simplistic and, from a communicative perspective, beside the point. In an open debate it will still be the rational weight of the arguments that matters, not the eventual strategic interests of the participants. Rational communication is a precondition for civilized conflict resolution as well as for the stability and durability of the political order.
Max Weber provided us with a typology of goal-oriented behavior which included, along with the rational self-interest variety, which he called Zweckrationalität , or instrumental behavior, Wertrationalität , or absolute value-oriented behavior, traditional or habitual behavior, and impulsive behavior. From this perspective we can see what a small part of the reality we, as social scientists, want to explain is captured by the rational choice model (Almond 1991, 49).     

How to gerrymander: A formal analysis

The paper combines the optimal gerrymandering approach in political science with the “fair cake division” results in mathematics and economics to consider optimal partisan gerrymandering schemes on a given territory. We analyze existence and properties of an optimal districting map for a strategic party that has control over redistricting process, given arbitrary continuous distributions of voters and party supporters over the electoral territory. Interestingly, we find that imposition of certain equality-type constraints on districting might often help to prevent gerrymandering and sustain fairness.     

Coalition-Targeted Duvergerian Voting: How Expectations Affect Voter Choice under Proportional Representation

Inspired by analyses of majoritarian systems, students of consensual polities have analyzed strategic voting due to barriers to party success, namely, district magnitude and threshold. Given the prevalence of coalition governments in proportional systems, we analyze a type of strategic voting seldom studied: how expected coalition composition affects voter choice. We identify Duvergerian behavior by voters targeted at the coalition formation stage. We contend that when voters perceive their preferred party as unlikely to participate in the coalition, they often desert it and instead support the lesser of evils among those they perceive as viable coalition partners. We demonstrate our argument using data on coalition expectations from the 2006 Israeli elections. We find an appreciable albeit differential effect of coalition expectations on voter choice. Importantly, results hold controlling for ideological and coalition preferences. Lastly, we explore a broad cross-national comparison, showing that there is less, not more, proximity voting where coalitions are prevalent.     

Comparing Attitudinal and Strategic Accounts of Dissenting Behavior on the U.S. Courts of Appeals

Students of judicial behavior have increasingly turned to strategic accounts to understand judicial decision making. Scholarship on the Supreme Court and state high courts suggests that the decision to dissent is better understood in light of strategic considerations rather than simply reflecting ideological disagreement. We investigate whether these findings comport with behavior by judges on the U.S. Courts of Appeals. We develop a spatial model of the decision to dissent that incorporates both attitudinal and strategic elements and subject this model to empirical analysis. We find that ideological disagreement between a judge and the majority opinion writer is a more persuasive explanation of the decision to dissent than a strategic account in which a judge conditions a dissent on whether circuit intervention would obtain the judge's preferred outcome. Though we do not discount the existence of other types of strategic behavior on the Courts of Appeals, our research suggests that strategic accounts of dissenting behavior are not generalizable to all courts .     

Candidate and Party Strategies in Two-Stage Elections Beginning with a Primary

In the United States and Latin America, candidates for national and state-level office frequently must win primary elections in order to advance to the general election. We model policy and valence issues for office-seeking candidates facing such two-stage elections. We determine a Nash equilibrium for the candidates' optimal strategies, and we find that holding a primary is likely to increase a party's chances of winning the general election, particularly in situations where valence issues that involve the candidates' campaigning skills and that are not known prior to the campaign are more salient than policy issues. Furthermore, we find that primary elections are especially likely to benefit parties that expect to be underdogs in the general election. Our conclusions are directly relevant to U.S. politics and by extension to the strategic decisions that many Latin American parties currently confront, about whether it is strategically desirable to hold primaries.