Public choice and the development of modern laboratory experimental methods in economics and political science

The paper is an account of the development of laboratory experimental methods in the early 1970s as influenced by the fields of Public Choice and Social Choice. Just a few key experiments conducted during a period when no experimental markets research was taking place, provide a bridge with the subsequent, rapid, growth of experimental economics. A new focus on public goods and externalities, as opposed to private goods traditionally used in economics experiments, required new representations of the commodity space and preference inducement methods. The importance of voting and collective decision making processes dictated the testing of equilibrium concepts from political science and cooperative game theory as opposed to the competitive equilibrium and Nash equilibria found in economics. The existence of many theories from multiple disciplines required new experimental designs and experimental tests. The Public Choice and Social Choice emphasis on comparing the performance of different types of collective decision processes induced early experiments related to institutional design and testing.     

Social preferences and voting: An exploration using a novel preference revealing mechanism

Public referenda are frequently used to determine the provision of public goods. As public programs have distributional consequences, a compelling question is what impact, if any, do social preferences have on voting behavior. This paper explores this issue using laboratory experiments wherein voting outcomes lead to a known distribution of net benefits across participants. Preferences are elicited using a novel Random Price Voting Mechanism (RPVM), which is more efficient in eliciting preferences than a dichotomous choice referendum but gives consistent results. Results suggest that social preferences, in particular a social efficiency motive, lead to economically meaningful deviations from selfish voting choices and increase the likelihood that welfare-enhancing programs are implemented.     

LA GESTION DES ENTREPRISES MUNICIPALES ENTRE MISSIONS DE SERVICE PUBLIC ET AUTONOMIE*

RESUME: Dam les Etats fédéraux, comme en Allemagne, les entreprises communales font partie intégrante de l'autommie de gestion locale par la mise à disposition d'une certaine infrastructure. Dernièrement, du côtéétatique et scientifique, on réclame de plus en plus une gestion de type commercial pour les entmprises publiques, et donc communales, d'infrastructure (approvisionnement, transport, évacuation). Cet article postule, à l'encore de ces tendances à l'uniformisation, de clairement marquer la distinction entre les fournisseurs privés et ceux du service public en raison de leur objet social différent. Même si la problématique de fond d‘une gestwn tutélaire d‘une entreprise est la même dam le secteur public que dans le secteur privé, le contnôle du comportement des gestwnnaires engagés est toutefois fort différent. La reddition de comptes de type commercial - qui est proposée également pour les entreprises publiques - permet plutôt de contnôler la gestion commerciale que cell d'un service public. Dam les deux cas, le contrôle comptable est complété par des dispositions organisationnelles. Dans le cas (d'infrastrmture), ces dispositions doivent satisfaire des exigemes différentes et nettement plus importantes que celles d'gpplication dans le secteur commercial en raison de la faible signification des résultats commerciaux dam le secteur public.     

Two Cheers and a Qualm for Behavioral Environmental Economics

Behavioral economics can gain more in-roads into environmental economics if we better understand why exchange institutions fail, more effectively reduce health risks and environmental conflicts, encourage more coordination and cooperation, design better incentive systems, more accurately estimate economic measures of value, and promote more protection at less cost. Behavioral economics deserves two cheers for advancing ideas of context-dependence and social preferences, which we illustrate with two examples of recent research.     

Feminist economics as a Postmodern Moment

Wicksell saw economics as a way to effect social change. In addition to academic writings, he produced a steady stream of pamphlets, newspaper editorials, and public lectures that brought theoretical economics to bear on social policy. In this paper, consideration is given to this wider variety of Wicksell's writings, and his unanimity rule for public goods decision making is examined within the context of his social philosophy. We argue that the unanimity rule, rather than being narrowly focused on efficiency concerns, operated as a practical mechanism to achieve Wicksell's larger goal of social justice. This stands in contrast to the interpretation of Wicksell commonly presented in the public choice literature.     

Dissertation abstract: Contribution to a public good - Theoretical analysis and experimental evidence

The work undertook is located between Public Economic Theory and Experimental Economics. The object of the thesis consists in analysing the aggregate behavior and the individual heterogeneity in a voluntary contribution game. The thesis defended here is that overcontribution in comparison to the Nash equilibrium of the game, can not be explained neither by judgement errors, nor by the information on the individual behaviour of the members in a one given group. The level of contribution observed remains nevertheless inferior to the one simulated using the E.W.A. learning model. The dissertation is composed of three parts and six chapters. The first chapter expresses the various theoretical mechanisms of production of a public good, while the second one presents an overview of the experimental literature using voluntary contribution mechanisms. The second part carries on the introduction of an interior solution in a public good game in order to distinguish an explanation of overcontribution in terms of mistakes or strategies. While chapter three presents the most important works in literature that use an interior solution, the fourth chapter constitutes a personal contribution consisting in an experiment with an interior optimum. Our main result is that individuals contribute a constant part of their social optimum and that overcontribution is not explained by error. We test then the simple learning model R.L. using the observed data on the aggregate level. This model predicts well the observed behaviour. The third part is composed of two experiments where the environment of players is modified. We introduce in chapter five promises as cheap talk and find that they increase contributions at the aggregate level. In chapter six, various conditions of information on individual contributions are tested. The parameter tested is the level of information on “neighbours” contributions given to players. One of the treatments presents full information about individual contributions of the members of the group, while this information is incomplete in the other treatments. Our results show that information has no effect on the level of contribution. We simulate then the EWA learning model both at the aggregate and the individual levels and compare the simulated data to the experimental one. These simulations predict a level of contribution that is higher that the one observed in the experiment. JEL Classification C91, C92, H41 Dissertation Committee: Alan Kirman (Ph.D. Advisor), Université d’Aix-Marseille III Marie-Claire Villeval (Chair), GATE, Lyon, France Jordi Brandts, Universitat Autonoma Barcelona, Spain Charles Noussair, Emory University, Alanta, GA, U.S.A. Sylvie Thoron, GREQAM & Université du Var, France Marc Willinger, Université de Montpellier I, France     

Regional Papers of Interest to Economic Educators

Using data collected from graduates who attended four large public universities in 1976, 1986, or 1996, the authors investigate the relationship between studying economics and civic behaviors. They compare students who majored in economics, business, or other majors, and by the number of undergraduate economics courses completed. Coursework is strongly associated with political party affiliation and donating money to candidates or parties, but not with voting in presidential, state, or local elections, nor with the likelihood or intensity of volunteerism. Business majors are less likely to engage in voting and volunteering. More economics coursework is usually associated with attitudes on policy issues closer to those reported in surveys of U.S. economists, while attitudes of business majors are more like those of general majors than economics majors.     

Social assistance and labour supply

The longitudinal, 1988–89 LMAS makes it possible to study the interaction between social assistance and labour supply while allowing for substantial time dependence. Tobit equations for hours worked on and off social assistance, which allow for endogenous selection of social assistance status, are estimated by using FIML. Small, but statistically significant, effects for a social assistance benefit variable are obtained, particularly for females. A claw‐back variable is not consistently useful. The wage rate has a consistently negative coefficient in the selection equations and is important in the Tobit equations. In this paper an attempt is made to reconcile results found in earlier literature. JEL Classification: I38, J22 Aide sociale et offre de travail. L'étude longitudinale de l'Enquête de 1988‐89 sur la population active rend possible l'étude de l'interaction entre l'aide sociale et l'offre de travail tout en permettant la prise en compte de l'effet d'inertie hérité du passé. On calibre des équations Tobit pour les heures travaillées séparément pour les personnes qui reçoivent et ne reçoivent pas d'aide sociale et une équation probit qui permet une sélection endogène du statut d'assisté social en utilisant la méthode du maximum de vraisemblance avec pleine information. On obtient des impacts faibles mais statistiquement significatifs des prestations d'aide sociale sur l'offre de travail pour les femmes. Une variable qui tente de capturer les effets de recouvrement fiscal des prestations n'est pas uniformément utile comme source d'explication. Le taux de salaire a un coefficient négatif de manière générale dans les équations de sélection et est important dans les équations Tobit. Le mémoire tente de réconcilier ces résultats avec ceux que contiennent les études antérieures.     

产权改革:谨防非效率资本支配的陷阱

不同资本-市场经济中的赢利能力是不同的,赢利能力较低的国有资本,而赢利能力强的是非公有资本,在执行同股同权的公司制企业中,应当防止形成非效率资本支配效率资本的局面,从而影响产权多元化改革之后经营机制的转变。为此,本提出,在国有企业进行产权多元化改革的过程中,应当坚持以效率资本为主导的原则,要正确理解提高国民经济控制力的要求,要解放思想,对非公有经济的地位、作用应当有一个全面深入的认识,让国有资本在公司制企业中搭其他类型资本的便车。     

Voting with the wallet

The vote with the wallet is a new, emerging feature of economic participation and democracy in the globally integrated market economy. This expression identifies the pivotal role that responsible consumption and investment can play in addressing social and environmental emergencies which have been aggravated by the asymmetry of power between domestic institutions and global corporations. In this paper, we examine (both in general and by using examples drawn from the financial and non-financial sectors) how ??voting?? for producers which are at the forefront of a three-sided efficiency which reconciles the creation of economic value with social and environmental responsibility may generate contagion effects by triggering ethical imitation of traditional profit-maximizing actors, thereby enhancing the production of positive social and environmental externalities. Within this new framework, policies that reduce the search and information costs of voting with the wallet may help socioeconomic systems to exploit the bottom-up market forces of other-regarding preferences, thereby enhancing opportunities to achieve well-being with reduced top-down government intervention.     

Evolution of cooperation in asymmetric commons dilemmas

Field experiments with asymmetric commons dilemmas have shown that groups who are able to derive high social efficiency also had higher equity compared to groups who were not able to derive significant levels of social efficiency. These findings resemble the high productivity in long-lasting irrigation systems based on self-governance. We present an agent-based model based on cultural group selection that shows that the patterns observed in the field experiments can be evolved in cases where agents participate regularly in less challenging symmetric public good dilemmas. These results indicate that cooperation in asymmetric dilemmas can evolve and persist when the agents contend with other social dilemmas than the asymmetric dilemmas.     

Contractual preferences and moral biases: social identity and procedural fairness in the exclusion game experiment

Many people may suffer from moral biases when making allocation decisions having consequences to others. This means that some factors hinder people from finding, or constructing, their true social preferences in those situations. As a counterforce to this, numerous devices of moral priming have evolved—such as parenting, formal education as well as various formal and informal contracting procedures. This paper focuses on the influences of social identity and the perceived fairness of contracting procedures on subjects’ behaviour in situations of allocation decisions. The analysis of experimental data suggest, first, that males are less likely than females to engage in other-regarding behaviour in a pre-agreement situation where two active players divide an endowment among themselves and a third, passive, player. However, this difference disappeared after the joint contract of the rule of dividing the endowment was made. Second, it was found that students of economics are less likely than other students to behave in an other-regarding way before the contract; this difference remained also in decisions after the contract was made. Finally, both a random selection mechanism and a majority voting mechanism were rated fair by the majority of the subjects. However, the data suggests that fairness ratings are positively associated with compliant behavior only in the case of the majority voting mechanism.     

Economic Analysis in Plain English: A Course in Economic Journalism

The authors describe an experimental economics course designed as a journalism workshop. Students were reporters, writing articles on economic events and issues and about prominent economists and their ideas. The articles were read and discussed by the entire class. The requirement to explain economics to lay readers clearly but accurately developed the students' own economic literacy.     

Endogenous public sector budgeting: to centralize or not?

In this paper the impact of budget size on a government's choice to centralize or decentralize the budgetary process is investigated using asymmetric information, differing preferences, and endogenous budgetary arrangements. The central government chooses between a budgetary process that excludes the regional board (centralization) and one that includes the board (decentralization) in the determination of program budget levels. It is predicted that the central government will decentralize the budgetary process at low and centralize at high overall budget levels. Switching from decentralization to centralization is predicted to result in a reduction in the budget allocated to the regional board. JEL Classification: H3, C7 Processus budgétaire endogène dans le secteur public: faut‐il centraliser ou non? Ce mémoire analyse l'impact de la taille du budget sur le choix par un gouvernement de centraliser ou non son processus budgétaire. On met en évidence l'information asymétrique, les préférences différentes, et les arrangements budgétaires endogènes. Le gouvernement central choisit entre un processus budgétaire qui exclut le conseil régional (centralisation) et un autre qui l'inclut (décentralisation) dans la détermination des niveaux de budgets pour les programmes. On montre que le gouvernement central va décentraliser le processus budgétaire quand les niveaux de budget sont bas, et centraliser à des niveaux de budget plus élevés. Un déplacement de la décentralisation vers la centralisation résulte en une réduction du budget alloué au conseil régional.     

Is it Harmful to Allow Partial Cooperation?

In economics, politics and society, examples abound in economics, politics and society where agents can enter partial cooperation schemes, i.e., they can collude with a subset of agents. Several contributions devoted to specific settings have claimed that such partial cooperation actually worsens welfare compared to the no-cooperation situation. Our paper assesses this view by highlighting the forces that lead to such results. We find that the nature of strategic spillovers is central to determining whether partial cooperation is bad. Our propositions are then applied to various examples as industry wage bargaining or local public goods.
JEL classification: C 72; E 62; J 5     

Voting on the environment: Price or ideology? Evidence from Swiss referendums

Studies on preferences for environmental quality usually posit that price and income explain most of the observed choices. Incorporating recent advances in the economics of non-selfish behavior into the traditional public choice approach, we argue that the willingness to contribute to public goods as well as social norms need to be taken into account when analyzing environmental voting outcomes. We study aggregate results of three ballot proposals in Switzerland put to vote in the year 2000 which foresaw different tax schemes on fossil energy. Our main results show that the aggregate level choice pattern is to be explained by income as well as structural attributes that make costs and benefits of the projects vary. More importantly, our results underline the importance of including variables pertaining to the notion of ideology, both in terms of statistical fit and obtaining unbiased estimates for price and income determinants.     

Expectations,uncertainty and institutions. An application to the analysis of social security reforms

The aging process that many developed economies will face in the medium-term is leading to reforms in the public pensions systems in order to solve the potential financial unsustainability generated by the foreseeable increase in the expenditure in pension benefits (assuming that the current social security contributions and the eligibility conditions will remain unchanged). Neoclassical economics defends a radical reform of these systems, substituting the current pay-as-you-go (PAYGO) systems by funded systems. In this paper, using the Post-Keynesian theory as a theoretical framework, we provide an alternative reflection to that proposed by the neoclassical economics about the choice between the alternative pension systems. The focus of the paper is the advantages of the PAYGO pension systems to stabilize the expectations of future income.     

The information-aggregation approach to political institutions

This paper offers a short survey of recent contributions about the information-aggregation role of political institutions. We argue that these recent developments represent a promising come-back to the Condorcet's original approach to political economy and allow to renew the efficiency analysis of alternative political institutions. In the same way as in the economic literature on the price system and the informational rationale for non-market insitutions such as firms, this recent literature that the basic efficiency of majority-rule voting and other electoral systems needs to be complemented by non-voting political institutions such as political parties, public debate and polls.     

道德行为的经济分析--新兴马克思主义经济学的道德理论

本文以社会存在决定社会意识为基本方法 ,对道德这一制度形态进行了经济学分析 ,并以社会群体的合作效率为评价标准 ,定义了道德的进步与道德的退步 ;通过道德函数的分析 ,明确了个体的道德自律能力与个体的道德行为之间、个体的道德行为与群体的道德风尚之间的关系。在此基础上 ,分析了道德变迁的基本机制 ,阐明了在发展中社会加快道德适应性变迁的主要思路     

On the importance of public choice in migration models

"Recent general equilibrium Tiebout models that use single-crossing indifference curves to establish a migration equilibrium incorporate both voting and migration decisions. These models have concentrated on the important question of the existence of an equilibrium, but the incorporation of both voting and migration has important efficiency consequences as well. This paper demonstrates the important effect of the interaction of voting and migration on efficiency conditions by showing that head taxes (which are generally considered to provide efficient migration incentives with constant marginal congestion costs) do not provide incentives for efficient migration decisions unless the public choice mechanism results in optimal public service provision within jurisdictions."