Electoral Rules, Political Systems, and Institutional Quality

This paper explores the links between political rules and institutional quality. The paper concentrates on two political measures: the presence of checks and balances in the political system and an index of political particularism that measures the incentives for politicians to build personal support bases. The paper finds a positive correlation between checks and balances and institutional quality. It also finds that intermediate levels of particularism are associated with higher institutional quality.     

Electoral competition under imperfect information

Summary. This paper considers electoral competition between two office-motivated parties and one voter, in the presence of two alternative policies and under imperfect information. The theory of refinements of Nash equilibrium predicts the outcome of this three-player game: both parties faithfully use their information and try to find the best policy for the voter. We discuss the meaning of this model for Politics and prove that the same result holds for any number of voters, provided that parties are expected plurality maximizers and that voters satisfy a version of the sincere voting assumption adapted to this strategic setting.Received: 12 December 2001, Revised: 16 June 2003JEL Classification Numbers: C72, D72, D82.Correspondence to: Jean-François LaslierThanks to Gabrielle Demange, Françoise Forges, Roger Guesnerie, Jean-Fran çois Mertens, Thomas Palfrey, Sylvain Sorin and other participants in workshops and conferences in Caen, Paris, Caltech and Yale. Thanks also to two anonymous referees and to Paul Heidues and Johan Lagerlöf for their comments. This work was originated when K. Van der Straeten was at THEMA (Université de Cergy-Pontoise) and DELTA.     

Comparison of Scoring Rules in Poisson Voting Games

Scoring rules are compared by their equilibria in simple voting games with Poisson population uncertainty, using new techniques for computing pivot probabilities. Best-rewarding rules like plurality voting can generate discriminatory equilibria where the voters disregard some candidate as not a serious contender, although he may be universally liked, or may be symmetric to other candidates as in the Condorcet cycle. Such discriminatory equilibria are eliminated by worst-punishing rules like negative voting, but then even a universally disliked candidate may have to be taken seriously. In simple bipolar elections, equilibria are always majoritarian and efficient under approval voting, but not other scoring rules. Journal of Economic Literature Classification: D72.     

The Proportionality of Electoral Systems: Electoral Welfare and Electoral Inequality

This paper argues that measuring the degree of proportionality in an electoral system is equivalent to measuring the degree of electoral inequality, defined in terms of inter-party differences in the seats-to-votes ratio. It proposes an index of the degree of electoral inequality which is based on Atkinson's (1970) index, applied originally to measuring income inequality. This index satisfies all the criteria proposed in the literature for evaluating measures of electoral proportionality. In addition, such an Atkinson-type index of electoral inequality can also be given a welfarist interpretation by directly relating its value to the level of electoral welfare. Under such an interpretation, the disproportionality in an electoral system may be interpreted as being the result of the system imputing voting shares to the different political parties which are different from their actual voting shares. The larger this difference, the greater the degree of disproportionality in the system. The use of this index is illustrated by an application to the outcomes of Irish General Elections from 1923 till 1997.     

Multi-Dimensional Procurement Auctions for Power Reserves: Robust Incentive-Compatible Scoring and Settlement Rules

System operators in the electricity industry purchase reserve capacity in a procurement auction in which suppliers offer two-part bids, one part for making capacity available and another part for supplying incremental energy when called. Key ingredients of an efficient auction design are the scoring rule for comparing bids, and the settlement rule for paying accepted bids. We use the principle of incentive compatibility to establish that very simple rules suffice. In particular, the scoring rule uses only the capacity part of the bid, and energy supplies are paid the spot price. This is the design adopted in California.     

Party Formation and Policy Outcomes under Different Electoral Systems

I introduce a model of representative democracy with strategic parties, strategic candidates, strategic voters and multiple districts. If policy preferences are similar across districts and not too concentrated within districts, then the number of effective parties is larger under proportional representation (PR) than under plurality, and both electoral systems determine the median voter's preferred policy. However, for more asymmetric distributions of preferences the Duvergerian predictions can be reversed , and the policy outcome with PR is more moderate than the one with plurality. Sincere voting induces more party formation, and strategic voting can be observed more often under PR.     

Media Plurality: Private versus Mixed Duopolies

In this paper, we analyze the level of media plurality in a market with two private news firms (private duopoly) and in a market with a private news firm and a public news firm (mixed duopoly). In the private duopoly news firms maximize profits. In the mixed duopoly, the private news firm maximizes profits, while the public news firm maximizes social welfare. We show that, in spite of the public news firm maximizing social welfare, neither media plurality nor social welfare needs to be higher under the mixed duopoly compared with the private duopoly. This will depend on the relation between the costs of adapting news to readers' political preferences, the intensity of the readers' political preferences, and the size of the advertising market.     

Determinacy and Stability under Learning of Rational Expectations Equilibria

This paper studies relationships between the local determinacy of a stationary equilibrium in the perfect foresight dynamics, and its local stability in dynamics arising from econometric learning procedures. Attention is focused on linear scalar economies where agents forecast only one period ahead, and with an arbitrary, but fixed, number of predetermined variables. In such a framework, it is well known that there are no clear links between the determinacy of the stationary state in the perfect foresight dynamics on the levels of the state variable, and its stability under learning. The paper emphasizes, however, that this is not the right perfect foresight dynamics to look at whenever agents try to learn the coefficients of the perfect foresight dynamics restricted to an eigenspace of lower dimension. Indeed the paper introduces a growth rate perfect foresight dynamics on these coefficients and proves equivalence between determinacy in that dynamics and stability under learning provided that a simple sign condition is satisfied. Journal of Economic Literature Classification Numbers: E32, D83.     

Rational Buyer Meets Rational Seller: Reserves Market Equilibria under Alternative Auction Designs

We examine efficiency properties and incentive compatibility of alternative auction formats that an electricity network system operator may use for the procurement of ancillary services required for real-time operations. We model the procurement auction as a hierarchical multiproduct auction, and study several designs such as a uniform price auction minimizing revealed social cost, a uniform price auction minimizing the system operator's cost and a pay as bid auction minimizing revealed social cost. We take into account that rational bidders will respond to any market design so as to maximize their expected benefit from participating in that market. Under the assumptions of our model, we show that the uniform price auction minimizing revealed social cost is the only one that guarantees productive efficiency. We also find that expected revenue (payment in our case) equivalence between pay as bid and uniform price auctions does not extend to the hierarchical products case and the ranking of these auctions is ambiguous and depends on the data. For the procurement auction minimizing the system operator's cost, we show that misrepresentation of capability may result in capacity shortages if there are capacity constraints. For the case where only higher capability resources are constrained, this will result in random price spikes decreasing in frequency with the price cap (this is the amount paid to capacity in demand states with shortages). When lower type resources are capacity constrained as well, price spikes will be seen for both type of resources. Such artificial shortages result in reduced reliability in real-time operations.     

Equilibria under deferred acceptance: Dropping strategies,filled positions,and welfare

We study many-to-one matching markets where hospitals have responsive preferences over students. We study the game induced by the student-optimal stable matching mechanism. We assume that students play their weakly dominant strategy of truth-telling.Roth and Sotomayor (1990) showed that equilibrium outcomes can be unstable. We prove that any stable matching is obtained in some equilibrium. We also show that the exhaustive class of dropping strategies does not necessarily generate the full set of equilibrium outcomes. Finally, we find that the ‘rural hospital theorem’ cannot be extended to the set of equilibrium outcomes and that welfare levels are in general unrelated to the set of stable matchings. Two important consequences are that, contrary to one-to-one matching markets, (a) filled positions depend on the equilibrium that is reached and (b) welfare levels are not bounded by the optimal stable matchings (with respect to the true preferences).     

Central Wage Setting under Multiple Technological Equilibria: A Mechanism for Equilibrium Elimination

Instituting an initial round of centralized wage setting before an ultimate round of decentralized wage bargaining may actually raise employment. A general multi–equilibrium model is set up with strategic complementarities in the implementation of a new technology through aggregate demand spillovers. In this model, centralized wage setting to establish an outside option wage, which is selectively binding on lo–tech firms, may achieve the "big push" to a hi–tech general equilibrium with higher employment, output, wages and profits.     

Protection for sale under monopolistic competition: Beyond the CES

We extend the protection for sale model of Grossman and Helpman (1994) by introducing a general model of monopolistic competition with variable markups and incomplete pass-through. We show that the structure of protection emerging in the political equilibrium not only depends on the weight attached by the government to consumer welfare when making its policy decision, but also on the degree of market power of firms and on the terms-of-trade variations due to the degree of pass-through. Our results highlight the importance of preferences in shaping the structure of protection and are consistent with the occurring of protectionism also in unorganized industries.     

WTO规则下的企业改革

中国成为WTO正式成员，意味着中国国民经济运行方式和规则将与WTO全面对接。对接，将给中国国有企业改革带来一系新的机遇，包括改革新动力的形成、改革环境的改善等等，同时也会给我国国有企业改革提出许多新的挑战，包括企业制度构造、进入壁垒、人才结构、企业生存等等。在WTO规则下，应对挑战的一个重要方面就是进一步深化企业改革。为此，必须站在21世纪经济的高度，做出一系列新的选择，包括学习与实现制度和规则的接轨、进一步弘扬自身比较优势、充分发掘企业和企业家潜能、提高企业产品综合质量、强化品牌和主动参与并购、大力发展民营经济等等。     

Scoring rules: an alternative parameterization

This note presents an alternative parameterization of any scoring rule that satisfies the score-expansion property. This parameterization is based on the vector that specifies, for every number of alternatives k, k ≥ 3, the minimal size of a coalition that can veto an alternative which is preferred by everybody outside the coalition. Our result sheds new light on the commonly used plurality and Borda rules, as well as the inverse plurality rule and any “vote for t alternatives rule”.     

Electoral manipulation via voter-friendly spending: Theory and evidence

We present a model of the political budget cycle in which incumbents try to influence voters by changing the composition of government spending, rather than overall spending or revenues. Rational voters may support an incumbent who targets them with spending before the election even though such spending may be due to opportunistic manipulation, because it may also reflect sincere preference of the incumbent for types of spending voters favor. Classifying expenditures into those which are likely targeted to voters and those that are not, we provide evidence supporting our model in data on local public finances for all Colombian municipalities. Our findings indicate both a pre-electoral increase in targeted expenditures, combined with a contraction of other types of expenditure, and a voter response to targeting.     

Electoral cycles in perceived corruption: International empirical evidence

I examine whether elections influence perceived corruption in the public sector. Perceived corruption in the public sector is measured by the reversed Transparency International's Perception of Corruption Index (CPI). The dataset includes around 100 democracies over the period 2012–2016, a sample for which the CPI is comparable across countries and over time. The results show that the reversed CPI was about 0.4 points higher in election years than in other years, indicating that perceived corruption in the public sector increased before elections. The effect is especially pronounced before early elections (1.0 points) compared to regular elections (0.4 points). Future research needs to investigate why perceived corruption in the public sector increased before elections.     

Electoral fraud and voter turnout: An experimental study

In this paper we experimentally investigate the consequences of electoral fraud on voter turnout. The experiment is based on a strategic binary voting model where voters decide whether to cast a costly vote in favour of their preferred candidate or to abstain. The electoral process is illicitly influenced by applying ballot-box stuffing. In the experiment we implement two different framings: we compare voter turnout in a neutral environment and with framed instructions to explicitly replicate elections. This approach enables us to both test the model's predictions and to estimate the framing effects of voting and fraud. Comparison of experimental results with theoretical predictions reveals over-voting, which is exacerbated when fraud occurs. Turnout increases as predicted with a moderate level of fraud while, with higher levels of electoral fraud, voters fail to recognize that the existence of a relatively larger number of “agents” voting with certainty considerably decreases the benefits of voting. Importantly, framing matters, as revealed by the higher turnout of those in the majority group, against which the fraud is applied.     

From Deficits to Debt and Back: Political Incentives under Numerical Fiscal Rules

Under numerical fiscal rules, such as those underpinning EMU,governments have strong temptations to use accounting tricksto meet the fiscal constraints. Given these political incentives,fiscal variables that in the past were regarded as a mere residualacquire a strategic role. This is the case of the so-calledstock-flow adjustment (SFA) which reconciles deficit and debtdevelopments. We develop a simple theoretical model where deficitsand two distinct SFA components (one that could be used to reducethe deficit figures and the other to impact debt figures instead)are determined as a result of a constrained optimisation byfiscal authorities. Econometric evidence provides results consistentwith the model findings. The SFA component related to the purposeto hide deficits rises with the recorded deficit, while thesales of financial assets designed to keep the debt under controlrise with both debt and deficit. When deficits are in excessof the 3 percent limit, accounting gimmicks become more sensitiveto the size of deficits. The SGP per se does not appear to increasethe extent to which higher deficits trigger more accountinggimmicks. However, the SGP seems associated with a more intenseuse of accounting gimmicks irrespective of the level of deficit.Such accounting practices have greatly contributed to the lossof credibility of Economic and Monetary Union's fiscal rules.If properly implemented, the reformed Pact, which stresses durableadjustment and long-run sustainability, should help curb suchperverse incentives. (JEL codes: E61, H62, H87)     

Median‐voter Equilibria in the Neoclassical Growth Model under Aggregation*

We study a dynamic version of Meltzer and Richard's median‐voter model where agents differ in wealth. Taxes are proportional to income and are redistributed as equal lump‐sum transfers. Voting occurs every period and each consumer votes for the tax that maximizes his welfare. We characterize time‐consistent Markov‐perfect equilibria twofold. First, restricting utility classes, we show that the economy's aggregate state is mean and median wealth. Second, we derive the median‐voter's first‐order condition interpreting it as a tradeoff between distortions and net wealth transfers. Our method for solving the steady state relies on a polynomial expansion around the steady state.     

混合选举制的兴起与当代选举制度的新发展

混合选举制的兴起,是1990年代以来民主化浪潮中的一道重要景观.以现有的文献为基础,本文旨在:归纳近年来通向混合选举制度的主要路径与基本动力,考察混合选举制度的基本类型,讨论混合选举制的政治后果,并结合混合选举制在新近的发展,尝试性地提出一种整合性的分析框架,以及这种框架对于民主转型研究的意义.