We consider a dynamic process of coalition formation in which a principal bargains sequentially with a group of agents. This problem is at the core of a variety of applications in economics and politics, including a lobbyist seeking to pass a bill, an entrepreneur setting up a start-up, or a firm seeking the approval of corrupt bureaucrats. We show that when the principal's willingness to pay is high, reallocating bargaining power from the principal to the agents generates delay and reduces agents' welfare. This occurs in spite of the lack of informational asymmetries or discriminatory offers. When this collective action problem is severe enough, agents prefer to give up considerable bargaining power in favor of the principal.
While elections can discipline elected politicians, the power of electoral accountability varies depending on the characteristics of each politician and on the state of the electoral race. To quantify this relationship we use data on US senators who ran for office between 2000-2012 to structurally estimate a (dynamic) model of the problem of an incumbent politician running for reelection. We quantify the value that each senator gives to office relative to ideology, and provide ideal point estimates that incorporate strategic position-taking. We also provide individual and aggregate measures of electoral accountability as a function of the competitiveness of the election, and evaluate how advertising affects electoral accountability.
We study optimal contracting between a principal and an agent who can contract on both the content of a policy and its implementation scale. We assume content and scale are not separable, as the value of expanding the scale of implementation increases when the policy is close to a player's preferred policy. In the optimal separating contract, an agent with an upward policy bias can only choose higher policies by reducing the scale of implementation. The solution differs qualitatively from standard quasilinear models and is ex-post inefficient, as the highest policies are too low for both parties and are under-implemented.
We study how campaign contributions aect the voting strategies and effectiveness of justices in the Supreme Court of eight US states. A judge's voting strategy leans more heavily towards an interest group the larger are its contributions to the judge, and the smaller are its contributions to other members of the court. This panel effect is consistent with an equilibrium response to contributions to other members of the court. Observed contributions have a large effect on the decisions and effectiveness of individual judges, but tend to counterbalance each other, producing a small effect on the decisions and effectiveness of the Court.
We quantify the effect of pre-vote deliberation on the decisions of US appellate courts. We estimate a model of strategic voting with incomplete information in which judges communicate before casting their votes, and then compare the probability of mistakes in the court with deliberation with a counterfactual of no pre-vote communication. The model has multiple equilibria, and judges' preferences and information parameters are only partially identifed. We find that deliberation can be useful when judges tend to disagree ex ante and their private information is relatively imprecise; otherwise, it tends to reduce the effectiveness of the court.
We consider a class of dynamic collective action problems in which either a single principal or two competing principals vie for the support of members of a group. We focus on the dynamic problem that emerges when agents' decisions to support an alternative are irreversible, and agents negotiate and commit their support to the principal sequentially. A danger for the agents in this context is that a principal may be able to poach agents to her side by exploiting competition among members of the group. Would agents benet from introducing competition between opposing principals? We show that when the principals' policies provide value to the agents, competition generally reduces agents' welfare. We study applications to endorsements in elections and corporate takeovers.
We argue that a model of judicial behavior that accounts for dierences in justices' ability and ideology provides a fruitful alternative for the empirical analysis of judicial decision-making around the world, and illustrate this by focusing on the case of the UK.We show that the model explains the decisions of the Lords of Appeal remarkably well, and improves the t of a purely ideological model. We use our estimates to tackle previously unaddressed questions about the relative role of justices' preferences and ability in the Appellate Committee.
We study a model of decentralized legislative bargaining with policy externalities. We establish the emergence of middlemen in legislative bargaining as a robust equilibrium phenomenon. We show that legislative intermediation can impact policy outcomes, and can be inefficient. To fulfill this role, the middleman's policy preferences and bargaining position must be such to make his role of intermediary credible. But the middleman must also directly benefit from policy change. Thus, the political broker is both an intermediary and a client. This result highlights a fundamental difference between intermediaries in politics and exchange economies.
In this paper, we study the conditions under which members of Congress incorporate policy-specic information in their voting decisions. To do this, we estimate an empirical model that accounts for uncertainty and private information about the quality of the proposal. We show that seniority and uncompetitive elections lead to higher ideological rigidity, and curtail the role of information in policy-making.
We link the intensity of campaign competition in different electoral systems with the number of candidates running for public office and their ideological differentiation. We show that proportional elections have more candidates, competing less aggressively in campaign spending, than those in majoritarian elections. Candidates’ ideological positions, however, can in general be more differentiated in majoritarian or proportional elections. We also study the equilibrium effects of plurality premiums and the consequences of heterogeneity among candidates in non-ideological characteristics.
In this paper, we address empirically the trade-offs involved in choosing between bureaucrats and politicians. In order to do this, we map institutions of selection and retention of public officials to the type of public officials they induce. We do this by specifying a collective decision-making model, and exploiting its equilibrium information to obtain estimates of the unobservable types. We focus on criminal decisions across US states' Supreme Courts. We find that justices that are shielded from voters' influence (“bureaucrats”) on average (i) have better information, (ii) are more likely to change their preconceived opinions about a case, and (iii) are more effective (make less mistakes) than their elected counterparts (“politicians”). We evaluate how performance would change if the courts replaced majority rule with unanimity rule.
We estimate a model of voting in Congress that allows for dispersed information about the quality of proposals in an equilibrium context. In equilibrium, the Senate only approves House bills that receive the support of a supermajority of members of the lower chamber. We estimate this endogenous supermajority rule to be about four-fifths on average across policy areas. Our results indicate that the value of information dispersed among legislators is significant, and that in equilibrium a large fraction of House members’ (40–50%) votes following their private information. Finally, we show that the probability of a type I error in Congress (not passing a good bill) is on average about twice as high as the probability of a type II error (passing a low-quality bill).
We study a model of elections in non-majoritarian systems that captures the link between competition in policies and competition in campaign spending. We argue that the overall competitiveness of the political arena depends on both the endogenous number of parties contesting the election and the endogenous level of campaign spending. These two dimensions are linked together through their combined effect on the total equilibrium level of political rents.We illustrate the key insights of the model with an analysis of the competitive effects of campaign spending limits. We show that under some conditions spending caps can be pro-competitive, leading to an increase in the number of parties contesting the elections.
We estimate an equilibrium model of decision making in the US Supreme Court that takes into account both private information and ideological differences between justices. We measure the value of information in the court by the probability that a justice votes differently from how she would have voted without case-specific information. Our results suggest a sizable value of information: in 44 percent of cases, justices’ initial leanings are changed by their personal assessments of the case. Our results also confirm the increased politicization of the Supreme Court in the last quarter century. Counterfactual simulations provide implications for institutional design.
We consider strategic voting in sequential committees in a common value setting with incomplete information. A proposal is considered against the status quo in one committee, and only upon its approval advances for consideration in a second committee. Committee members (i) are privately and imperfectly informed about an unobservable state of nature which is relevant to their payos, and (ii) have a publicly observable bias with which they evaluate information. We show that the tally of votes in the originating committee can aggregate and transmit relevant information for members of the second committee in equilibrium, provide conditions for the composition and size of committees under which this occurs, and characterize all three classes of voting equilibria with relevant informative voting.
This paper examines the institutional determinants of discipline in legislative parties. The model formalizes the tradeoff between resources at the leader’s discretion, and the leader’s need to maintain a minimum level of support to continue leading. The value of the leader’s promises of future benefits is here endogenously determined by the backbenchers’ beliefs about the extent of support to the leader among other party legislators. Rewards that can be distributed publicly and on the spot are effective tools to coordinate beliefs about the stability of the leader, and thus also increase the value of the leader’s promises of future benefits. These spot resources are in fact necessary for the leader to be powerful: without them, the leader can use promises of future benefits to sway members’ behavior only if a majority of the party agrees (ex ante) with the leader’s preferred position in the first place.
Iaryczower, Matias, Pablo T Spiller, and Mariano Tommasi. “The Supreme Court.” In The Institutional Foundations of Public Policy in Argentina: A Transaction Cost Approach, edited by Pablo T Spiller and Mariano Tommasi. Cambridge University Press, 2007.
This paper links the theory of interest groups influence over the legislature with that of congressional control over the judiciary. The resulting framework reconciles the theoretical literature of lobbying with the negative available evidence on the impact of lobbying over legislative outcomes, and sheds light to the determinants of lobbying in separation-of-powers systems. We provide conditions for judicial decisions to be sensitive to legislative lobbying, and find that lobbying falls the more divided the legislature is on the relevant issues. We apply this framework to analyze supreme court labor decisions in Argentina,
and find results consistent with the predictions of the theory.
Argentina's constitution and electoral rules promote a fragmented polity. It is in those environments that independent judiciaries develop. Instead, most analysts do not consider the Argentina judiciary as independent. In this article we attempt to explain this contradiction by showing that this perception is inappropriate. We develop a test of the hypothesis that the judiciary is independent by empirically examining the political incentives faced by individual justices in their decision making. Our results show an often-defiant Court subject to constraints. Our measure of defiance is the probability of a nonaligned justice voting against the government. We find that judicial decision making was strategic. The probability of voting against the government falls the stronger the control of the president over the legislature, but increases the less aligned the justice is with the president. Thus, politics and process matter in understanding Argentina's Supreme Court decisions. Institutions matter in Argentina as well.