Following the present atmosphere of budgetary cuts we analyze the effects of fiscal consolidation on the composition of government expenditures by functions. Using a dynamic voter group decision model and exploiting the panel structure of the dataset – 26 OECD countries over the period 1970-1997by GMM estimation we find that fiscal adjustments protect social expenditure. Nevertheless, we find t...

In an experiment on sequential rent seeking, we find that the theoretically predicted first-mover advantage does not exist empirically. Rather, a second-mover advantage can be observed. Though the subgame perfect equilibrium can not prevail in experiment, individual behavior is highly reasonable nevertheless, such that subjects appear to play a reduced form of the original game. We also observe...

We develop an equilibrium model to analyze the role of the media in electoral competition. When policy payoffs are state-dependent, party policies do not converge to the median voter’s ideal policy if the media report only party policies. News analysis about the state, though possibly biased, can discipline off-equilibrium deviations and make the parties adopt more centrist policies. Since vote...

The costs of rent seeking exceed traditional measures when opportunity cost is considered. When the quantity of resources consumed by rent seeking is large, rent seeking draws consumer surplus out of alternative resource employments. The costs of rent seeking differ in partial and general equilibrium frameworks; Tullock (1989) recognizes this but incorrectly argues that rent seeking costs are t...

We develop an equilibrium model to analyze the role of the media in electoral competition. When policy payoffs are state-dependent, party policies do not converge to the median voter’s ideal policy if the media report only party policies. News analysis about the state, though possibly biased, can discipline off-equilibrium deviations and make the parties adopt more centrist policies. Since vote...

In this paper, we consider political competition games of two parties in multi-dimensional policy spaces, where the two parties have two factions, opportunists and militants, that intra-party bargain with each other. In such a game, we adopt the party-unanimity Nash equilibrium (PUNE) [Roemer (1998; 1999; 2001)] as an appropriate solution concept, and examine the general existence problem of th...

We use laboratory experiments to test for one of the foundations of the rational voter paradigm —that voters respond to probabilities of being pivotal. We exploit a setup that entails stark theoretical effects of information concerning the preference distribution (as revealed through polls) on costly participation decisions. The data reveal several insights. First, voting propensity increases s...

This paper explores the criterion validity of stated preference methods through experimental referenda that capture key characteristics of a stated preference survey for a proposed environmental program. In particular, we investigate whether advisory referenda, where participant votes have either known or unknown weight in the policy decision, can elicit values comparable to that of a standard,...

We analyze the influence of IMF and World Bank programs on political regime transitions. We develop an extended version of Acemoglu and Robinson’s [American Economic Review 91, 2001] model of political transitions to show how the anticipation of new loans from international financial institutions can trigger political transitions which would not otherwise have taken place. We test this unexplor...

Many people vote in large elections with costs to vote although the expected benefits would seem to be infinitesimal to a rational mind. We show that prospect and regret theories cannot solve this paradox of not voting and may even aggravate it. However, if the possibility of a decisive vote comes to mind, expected utility maximizers will doubt their preference for abstention and greatly overes...