Testing economic theories of voter behaviour using micro-data

Three hypotheses often encountered in economic analyses of voter behaviour are tested using an extensive data set derived from six consecutive national election studies in the Netherlands in the period 1971–1986. These hypotheses are: (i) the party choice and turnout decisions are taken sequentially and independently by voters; (ii) social gorups play a central role in the decisionmaking processes in the political sphere; (iii) the effect of individual-level variables on party choice is stable over time. The results provide support for the first hypothesis and partial support for the second, where the specific categorization of individuals to be chosen is a matter that needs further investigation. The third hypothesis is rejected by the data: the relationship between the variables chosen and party choice proved to be unstable.     

Sequential and multinomial logit: A nested model

A nested model is presented which has both the sequential and the multinomial logit model as special cases. This model provides a simple test to investigate the validity of these specifications. Some theoretical properties of the model are discussed. During the analysis a distribution function is derived, which, to the best of our knowledge, has not been used before. This distribution is shown to be a generalization of the typeI extreme-value distribution. Monte Carlo experiments and empirical applications of the model are presented.     

Information and strategic voting

We theoretically and experimentally study voter behavior in a setting characterized by plurality rule and mandatory voting. Voters choose from three options. We are interested in the occurrence of strategic voting in an environment where Condorcet cycles may occur and focus on how information about the preference distribution affects strategic behavior. We also vary the relative importance of the second preferred option. Quantal response equilibrium analysis is used to analyze the game and derive predictions. Our results indeed show that strategic voting arises. Its extent depends on (i) information availability; (ii) the relative importance of the intermediate candidate; (iii) the electorate’s relative support for one’s preferred candidate; (iv) the relative position of the plurality-supported candidate in one’s preference ordering. Our results show that information serves as a coordination device where strategic voting does not harm the plurality-preferred candidate’s chances of winning.     

How individuals choose health insurance: An experimental analysis

An individual choosing a health insurance policy faces a complex decision environment where a large set of alternatives differ on a variety of dimensions. There is uncertainty and the choice is repeated at least once a year. We study decisions and decision strategies in a laboratory experiment where we create a controlled environment that closely mirrors this setting. We use an electronic information board that allows to carefully monitor the individual's decision strategy. The number of alternatives, switching costs, and the speed at which health deteriorates are varied across treatments. We find that most subjects' search is based more on attributes than on policies. Moreover, we find that an increase in the number of alternatives increases decision-making time; makes subjects consider a lower fraction of the available information; makes it more likely that subjects will switch; and decreases the quality of their decisions. The introduction of positive costs of switching makes people switch less often but improves the quality of their decisions. Finally, if health deteriorates only gradually, individuals tend to stick to their current policy too long.     

Competition for versus on the Rails: A Laboratory Experiment*

European countries and Japan are contemplating more competition in passenger rail service. In the Netherlands, the Ministry of Transport was assigned responsibility for making a recommendation to Parliament for choosing between competition for the rails and competition on the rails. The Ministry commissioned the experiments reported here to acquire better understanding of the properties of the alternative policies. Competition on the rails involves allocation of rights to use station and time‐slot routes by price bids in a combinatorial auction. Competition for the rails involves allocation of rights to regional monopolies by fare‐structure bids for supplying a prespecified minimum schedule.     

BIDDING TO GIVE: AN EXPERIMENTAL COMPARISON OF AUCTIONS FOR CHARITY*

We experimentally compare three mechanisms used to raise money for charities: first‐price winner‐pay auctions, first‐price all‐pay auctions, and lotteries. We stay close to the characteristics of most charity auctions by using an environment with incomplete information and independent private values. Our results support theoretical predictions by showing that the all‐pay format raises substantially higher revenue than the other mechanisms.